7th roundtable meeting between central banks of Mongolia and China commences

In an effort to promote cooperation, the central banks of Mongolia and China are organizing the seventh roundtable meeting that will continue until July 28.

The main focus of this year’s roundtable meeting will be the currency swap agreement between the central banks. On July 6, Mongol Bank and the People’s Bank of China extended their 15 billion RMB swap agreement to 2020. Vice Governor of Mongol Bank B.Lkhavgasuren has noted that the swap agreement between the two countries will play a significant role in helping trade between Mongolia and China, which will be conducted in either MNT or RMB instead of USD.

“Mongolia has used around 70 percent of the 15 billion RMB. The Chinese side has only used 500 million MNT. Therefore, we need to focus on increasing the MNT use of China. Currently, 12 Mongolian banks are working in partnership with Chinese banks. Bank of China and Industrial and Commercial Bank of China (ICBC) have a representative office in Ulaanbaatar. They have not officially opened a branch. There is no law that fully regulates the opening of any branches of foreign banks on Mongolian soil. The legislature is being reformed currently,” said Vice Governor B.Lkhavgasuren.

During this year’s roundtable meeting, Chinese banks have expressed interest in opening branches in Mongolia. The President of the Mongolian Bankers Association O.Orkhon talked about how Mongolian banks have also probed about issuing bonds on the Chinese market in order to raise capital.

“The cooperation between the countries in the financial sector is developing successfully. The swap agreement being extended until 2020 is evidence of this. This year’s roundtable will focus on establishing a connected sector and increasing foreign currency transactions between the two banks. We are confident that we will be able promote further cooperation as part of China’s One Road, One Belt initiative. A need to implement large infrastructure projects will arise as part of the initiative. There are often financial problems in the way of executing large projects. Seeing as there is a lot of risk involved, private businesses are reluctant to invest in such ventures. Therefore, there is a need to develop the financial cooperation between the two countries,” said Ming Ai, Director of the International Department of the People’s Bank of China.