Amid growing criticism of China's financial vulnerabilities, a major policy meeting this weekend mainly focused on curbing financial risk, a decision that is widely expected to set the scene for reforms in the next five years.

Financial stability is crucial to maintaining public confidence in the Chinese economy, which in turn is necessary for further internationalization of the yuan.

The two-day National Financial Work Conference, which ended on Saturday, outlined three main tasks: making the financial sector better serve the real economy, curtailing financial risks and deepening financial reforms. The conference decided to establish a commission to coordinate oversight of financial stability.

The meeting, which is held only once every five years, also referred to the financial opening-up to the outside world, deepening reform of the exchange rate formation mechanism and steadily facilitating the yuan's internationalization.

The internationalization of the yuan is expected to promote the opening-up of China's capital markets, but it could also increase the economy's vulnerability to external risks. A currency's internationalization process is intended to make more countries hold the currency. But holders of a particular currency might choose to sell it at any time, for any reason, which could be a problem for the country that issues the currency - unless that country's economy is too big to fail.

For example, even amid and after the global financial crisis in 2008, there was no widespread dumping of US dollar-denominated assets such as bonds. The US economy is just too big to fail.

China's economy still lags behind that of the US in size and power. The central government should remain wary of possible financial risks during the yuan's internationalization process.

The most critical task facing China is to convince people to hold onto their yuan-denominated assets, meaning that it needs to maintain public confidence in its economy.

In this sense, it is especially important for China to guard against financial risks and deepen financial reforms, given the concern over the country's slowing growth, debt-to-GDP ratio and nonperforming loans. The yuan's internationalization cannot be achieved without the foundation of financial stability.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn