LONDON, March 7 (Reuters) – China is planning to
extend renminbi loans to other major emerging BRIC countries, in
another step toward the expansion of the yuan’s role in foreign
exchange, the Financial Times reported on Wednesday.
The China Development Bank (CDB) will sign a memorandum of
understanding at a meeting with its BRICs counterparts – Russia,
South Africa, Brazil and India – in New Delhi on March 29, the
newspaper reported, citing people familiar with the talks.
Under the agreement CDB, which lends mainly in dollars
overseas, will make renminbi loans available, while the other
BRICs nations’ development banks will also extend loans
denominated in their respective currencies, the FT said in an
article published on its website.
The renminbi is the official currency of China and its
primary unit is the yuan. Of the six largest economies in the
world, China is the only one whose currency does not have
reserve status.
The initiative aims to boost trade between the five BRICs
nations and promote use of the renminbi, rather than the U.S.
dollar, for international trade and cross-border lending, the FT
said.
In the past few years Chinese authorities have begun to
gradually internationalise the currency before fully
liberalising China’s capital account.
Much of China’s banking system, however, remains regulated,
and lending is largely controlled.
BNDES, Brazil’s development bank, and South Africa’s Finance
Ministry were cited by the FT as saying they expected an
agreement to be signed at the New Delhi meeting, which would
include the lending pledge, with details to be ironed out during
a summit.
“We will discuss the creation of structures and mechanisms
for lending in local currencies in order to maximise economic
and financial transactions between the countries that are
members of the accord,” BNDES was quoted as saying.
Other signatories would include Russia’s Vnesheconombank,
the Export-Import Bank of India and the Development Bank of
Southern Africa, according to the article.
