Fa­cil­i­tat­ing ren­minbi in­ter­na­tion­al­iza­tion

ChinAfrica - - Cover Story -

The NDB is the first in­ter­na­tional fi­nan­cial in­sti­tu­tion head­quar­tered in China, but it doesn’t mean it is Chi­nese-dom­i­nated, ac­cord­ing to Maas­dorp. “Shang­hai is cho­sen be­cause it is a ma­jor fi­nan­cial cen­ter and will at­tract global fo­cus in fi­nan­cial terms,” he said. In fact, the bank works on an equal-share vot­ing ba­sis with each of the five sig­na­to­ries con­tribut­ing $10 bil­lion to its $50-bil­lion ini­tial cap­i­tal.

Fan Yong­ming, Di­rec­tor of the Cen­ter of BRICS Coun­tries Stud­ies of Fu­dan Univer­sity, be­lieves such an ar­range­ment will give de­vel­op­ing coun­tries’ a louder voice in in­ter­na­tional mon­e­tary and fi­nan­cial sys­tems and bring in a di­ver­si­fied in­ter­na­tional mon­e­tary sys­tem.

“The es­tab­lish­ment of the NDB will fa­cil­i­tate in­ter­na­tion­al­iza­tion of China’s ren­minbi by of­fer­ing a plat­form for the cur­rency cir­cu­la­tion,” said Fan. He ex­plained that the NDB is­sues bonds in the in­ter­na­tional fi­nan­cial mar­ket be­sides ab­sorb­ing de­posits to raise funds. “With ren­minbi-dom­i­nated bonds be­ing bought by global in­vestors on a large scale, the process of cur­rency in­ter­na­tion­al­iza­tion is ad­vanced,” said Fan.

In the fu­ture, the NDB will also of­fer ser­vices as gen­eral com­mer­cial banks do, like trade set­tle­ment, be­sides sup­port­ing de­vel­op­ment projects with low in­ter­est rate loans. “En­larg­ing the share of ren­minbi in set­tling in­ter­na­tional trade trans­ac­tions is also an im­por­tant as­pect of ac­cel­er­at­ing the process of its in­ter­na­tion­al­iza­tion,” said Fan.

He added that the NDB is not re­plac­ing cur­rent in­ter­na­tional or re­gional fund­ing in­sti­tu­tions but rather com­pli­ments them and helps push for­ward re­forms of es­tab­lished in­ter­na­tional fi­nan­cial mech­a­nisms. “The NDB and other in­sti­tu­tions are more part­ners than com­peti­tors,” he said. “It is such co­op­er­a­tion and com­pe­ti­tion that ad­vances re­forms on cur­rent mech­a­nisms and brings emerg­ing economies to the at­ten­tion of es­tab­lished fi­nan­cial in­sti­tu­tions.” Com­ments to houweili@chi­nafrica.cn

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