PBOC pushes yuan clear­ing ser­vices along Belt and Road

Bi­lat­eral, mul­ti­lat­eral fi­nan­cial plat­forms will help fa­cil­i­tate trade and in­vest­ment

China Daily (USA) - - BUSINESS - By ZHONGNANand MAOWEIHUA in Urumqi Con­tact the writ­ers at zhong­nan@ chi­nadaily.com.cn and maoweihua@ chi­nadaily.com.cn

The cen­tral bank will con­tinue to make more bi­lat­eral cur­rency swap deals, and en­large the scope and scale of ren­minbi set­tle­ments with coun­tries along the Belt and Road Ini­tia­tive to cut ex­change rate risk and trans­ac­tion cost for trade and in­vest­ment, said a se­nior cen­tral bank of­fi­cial on Wed­nes­day.

Chen Yulu, deputy gover­nor of the Peo­ple’s Bank of China, said China will use both bi­lat­eral and mul­ti­lat­eral fi­nan­cial co­op­er­a­tion plat­forms and more flex­i­ble fi­nan­cial ser­vice poli­cies to fur­ther fa­cil­i­tate trade and in­vest­ment along these two trad­ing routes.

The ac­tual pay­ment amount be­tween China and coun­tries and re­gions along the Belt and Road Ini­tia­tive amounted to 860 bil­lion yuan ($129 bil­lion) be­tween Jan­uary and Au­gust this year.

The Peo­ple’s Bank of China has so far signed 21 bi­lat­eral cur­rency swap agree­ments with cen­tral banks along the Belt and Road Ini­tia­tive, with a to­tal scale of 1.4 tril­lion yuan.

Six coun­tries along the routes have been au­tho­rized as renm i n b i qual­i­fied fore ign in­sti­tu­tional in­vestors, with a to­tal quota of 330 bil­lion yuan, by the Pe o p l e ’s BankofChina. China has also es­tab­lished five ren­minbi clear­ing banks along these two trad­ing routes.

The in­fra­struc­ture, ser­vice and trade network pro­posed by China in 2013 en­vi­sions a Silk Road Eco­nomic Belt and a 21st Cen­tury Mar­itime Silk Road, cov­er­ing about 4.4 bil­lion peo­ple in more than 60 coun­tries and re­gions in Asia, Europe and Africa.

“The es­tab­lish­ment of a sound green fi­nanc­ing mech­a­nism will be a sys­temic project that re­quires co­or­di­na­tion among cen­tral au­thor­i­ties, lo­cal gov­ern­ments, fi­nan­cial in­sti­tu­tions and en­ter­prises,” said Chen at the Silk Road Fi­nan­cial Fo­rum, a part of the Fifth China-Eura­sia Expo held in Urumqi, the cap­i­tal city of the Xin­jiang Uygur au­ton­o­mous re­gion.

Be­cause many in­fra­struc­ture projects that are be­ing built or will be built in mar­kets along the Belt and Road Ini­tia­tive re­quire a large amount of cap­i­tal and need to wait a long time to gain fi­nan­cial re­turns, Chen said it is also im­por­tant to de­velop trans­porta­tion, en­vi­ron­men­tal pro­tec­tion, pub­lic ser­vice and in­fra­struc­ture through the pub­lic-pri­vate part­ner­ship model.

In the PPP, a gov­ern­ment ser­vice or pri­vate busi­ness ven­ture is funded and op­er­ated through a part­ner­ship of gov­ern­ment and one or more com­pa­nies from the pri­vate sec­tor.

Ji Yuhua, deputy di­rec­tor of pol­icy re­search depart­ment at the China In­sur­ance Reg­u­la­tory Com­mis­sion, said in­sur­ance com­pa­nies and reg­u­la­tory au­thor­i­ties are keen to of­fer more fi­nan­cial sup­port for medium and long-term projects in coun­tries along the Belt and Road Ini­tia­tive, as cap­i­tal needed by life in­sur­ance com­pa­nies has an eco­nomic cy­cle be­tween 30 and 40 years.

Ea­ger to gain more fi­nan­cial re­turn from over­seas mar­kets, Chi­nese in­sur­ance com­pa­nies have also es­tab­lished an in­vest­ment fund with cap­i­tal of 300 bil­lion yuan in 2015, and a con­sid­er­able part of the fund have been in­vested in in­fra­struc­ture and ser­vices along the Belt and Road.

Chen Yulu, deputy gover­nor of the Peo­ple's Bank of China

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.