Yuan to play a bigger role in Central Asia

Updated: 2013-09-04 07:44

By Zhong Nan in Urumqi (China Daily)

  Comments() Print Mail Large Medium  Small 分享按钮 0

As many countries in the Eurasian corridor seek effective measures to improve their economies, senior officials from Central Asia and Pakistan's central banks are urging China to establish a solid regional financial cooperative platform to prevent and lower the damage created by developed economies.

Ashraf Wathra, deputy governor of the State Bank of Pakistan, said the global financial crisis has engendered long-term effects on commodity prices for Pakistan over the past several years and many of its enterprises are also having difficulties in gaining loans from both local and foreign commercial banks.

"There are solutions to tackle this problem that can and will address the needs of our country and allow Pakistani companies to obtain the access to apply foreign loans and other financial products, which will result in more investment activity and innovative services, if China and neighboring nations allow free capital movement and further cooperation between different banks," he said.

In comparison with Central Asia and Pakistan, China has a well-developed manufacturing foundation and financial service systems, Wathra said. "Establishing a regional financial service platform can be helpful to balance the regional economy and stimulate internal investment within the Eurasia passage, instead of only lending money to developed countries."

Wathra hopes China will set up more financial service institutions and settle bilateral trade in local currencies within the Eurasia passage. The implementation of a currency settlement agreement will promote more currency exchanges between different markets. A similar method has already been implemented: The current bank coordination mechanism between member nations of the Shanghai Cooperation Organization has had a significant effect on improving a number of sectors in Russia and Central Asian countries, including energy, infrastructure, transportation, logistics, retail, education and tourism.

Yuan to play a bigger role in Central Asia

Yusufiyon Jamshed, deputy chairman of the National Bank of Tajikistan, said Central Asia, Mongolia and Russia must act quickly and improve regional financial stability through a number of approaches with China, including signing more agreements to allow different regional currencies to be directly converted, offering simplified loan policies and setting up bank branches.

"With upcoming shifts driven by China's trade, industrial and investment activities, it will assist our companies, especially small and medium-sized enterprises, to gain loans from China through regional financial cooporation and favorable policies," Jamshed said.

He feels that holding a certain amount of yuan assets would help Central Asian governments "ease their heavy dependence on the US dollar and build a fair trading environment between China and Central Asia".

As the dominant reserve currency in the world, the US dollar is mostly used in global trade transactions and for invoicing goods and services. The majority of transactions between Chinese and Central Asian companies are still based on its exchange rate.

"But to lower the risk caused by unexpected economic crises, quantitative easing measures and further depreciation of the US dollar, closer financial cooperation can further protect our energy, commodity, agricultural product and human resource industries," Jamshed said.

"If you look at the currency rate risk management of the reserve portfolio, the renminbi has performed well in recent years because it is supported by China's enormous international reserves," said Huo Jingtai, a professor at Xinjiang University of Finance and Economics in Urumqi.

Previous Page 1 2 Next Page