Remarks by Governor Zhou Xiaochuan at the Thematic Session on Financial Connectivity during the Belt and Road Forum for International Cooperation Ladies and gentlemen, dear guests, The theme of this thematic session is financial connectivity, which is an important pillar of the Belt and Road Initiative. The essence of the Belt and Road Initiative is extensive consultation, joint contribution and shared benefits. Not a single country can do it alone. Investment and financing cooperation requires joint efforts from all Belt and Road countries. Besides, government resources are limited, which makes it necessary to strengthen the division of labor and coordination between government and market. To ensure sustainable investment and financing requires a market-based approach that allows businesses to play a leading role. We are willing to enhance cooperation in investment and financing with countries involved in the Belt and Road Initiative based on the principle of openness, inclusiveness, equality and mutual benefit. Now, I would like to focus on the following points. First, promote financial connectivity under the Belt and Road Initiative by tapping development finance. The development of Belt and Road features long-term projects with massive financing demands, where development finance can play an important role. Development financial institutions, such as the World Bank, the European Bank for Reconstruction and Development and the Inter-American Development Bank, have provided sizable financing to developing countries over the years. In recent years, Chinese development financial institutions have also made active attempts in this area. Development finance refers to a mode of financing that has the following characteristics: serving national strategies with credit enhancement rather than government subsidies, operating independently on market principles, with emphasis on long-term investment and financial sustainability, ensuring principal safety and modest returns rather than pursuing commercial profitability. It has been proved that development finance has multiple advantages. For example, development financial institutions can mobilize different resources by connecting government with market. In the meantime, they could crowd-in private capital and provide medium-to-long- term credit support to those with special needs. Second, encourage banks to expand their network and provide better financial services so as to further facilitate trade and investment. The development of Belt and Road not only requires investment and financing cooperation, but also involves a large number of supporting financial services, including correspondent banking, syndicated loans, funds settlement and clearing, project loans, account management and risk management. Promoting trade connectivity and improving services for overseas investment both call for increasing the presence of financial institutions and services in an expedited manner and improving financial services for trade. Only by doing so can a benign circle take shape between finance and the real economy, breaking the gridlock in economic development. We are willing to strengthen communication and cooperation with financial regulators from all countries, jointly remove all types of unreasonable access barriers and restrictions, and create an open, equitable and orderly regulatory environment to better promote wider presence of financial institutions and services, and thus support the development of Belt and Road. It is worth mentioning that commercial banks from Belt and Road countries have recently made active attempts to push forward financial cooperation. The Asia Financial Cooperation Association has been established lately, which will provide extensive support for financial cooperation in the region. The Industrial and Commercial Bank of China has launched a Belt and Road bank cooperation action plan in tandem with major banks from Belt and Road countries, such as Pakistan, Uzbekistan and Austria, putting in place a standing cooperation and communication mechanism among banks. Ways to deepen cooperation could be further discussed as appropriate. Third, strengthen financial infrastructure connectivity and promote financial inclusion represented by community banks and the Internet/telecommunication payment. Financial infrastructure connectivity among Belt and Road countries would help ensure the efficiency and overall stability of financial markets. In recent years, China has already seen some progress in this regard. For instance, the China UnionPay’s cross-border payment network covers 160 countries and regions, including many Belt and Road countries, which provides high-quality, safe and highly efficient payment services for businesses and residents in these countries. In China, community banks are represented by rural credit unions with useful experiences in improving rural financial services and pooling local savings. We would also like to exchange ideas and share experience in promoting financial inclusion that focuses on mobile payment and telecommunication payment. Fourth, promote the use of local currencies in building the Belt and Road. Using local currencies would help effectively mobilize local savings, lower exchange cost and safeguard financial stability. There are already such experiences to draw on. China has made some efforts, including signing local currency swap agreements, launching direct currency exchanges, appointing RMB clearing banks and establishing RMB Cross-border Interbank Payment System (CIPS). We are willing to share experiences with Belt and Road countries and explore together wider use of local currencies in the Belt and Road cooperation to better meet market demands and the need of economic development. In addition, we also hope to further develop our capital markets, including equity and bond markets, and step up the connectivity of equity and bond financing. Finally, thank you for attending this thematic session. I hope everyone can take this opportunity to discuss how to improve financial connectivity under the Belt and Road Initiative.(Come from:The people's bank of china) |
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