- China signed the yuan-denominated loans at the Belt and Road Initiative Forum on Wednesday.
- The latest BRI loans marked another shift away from the greenback.
- Beijing’s yuan debt surge comes after most of its previous BRI loans were denominated in US dollars.
China’s policy banks signed off on yuan-denominated loans on Wednesday at the latest Belt and Road Initiative Forum in Beijing.
Beijing’s yuan lending spree marks another step toward internationalizing the yuan and dollarizing global finance, while at odds with its earlier BRI loans.
Yuan-based loans at the BRI meeting include deals signed by China Development Bank with Malaysia’s Maybank, Egypt’s Central Bank and BBVA Peru. According to Reuters.
The Export-Import Bank of China also signed a yuan-based loan agreement with the Saudi National Bank. With the help of the Bank of China, Egypt issued the first-ever $479 million worth of panda bonds to help repay its foreign debt.
Beijing has earmarked an additional 80 billion yuan ($10.94 billion) for its Silk Road Fund, which promotes BRI projects, Reuters added.
China’s policy banks are state-backed lenders used by Beijing to advance long-term goals such as the BRI. A massive infrastructure campaign was instituted by President Xi Jinping a decade ago to expand China’s ties to markets around the world.
China’s goal of eradicating the dollar is another policy priority, and new data from the SWIFT international banking system revealed that the yuan accounted for a record 3.71% of international payments in September. Still, this pales in comparison to the dollar’s 46.6% share.
Meanwhile, China has signed bilateral currency swap agreements with 20 partner countries and established yuan settlement arrangements in 17. White paper Released before the Belt and Road Summit.
Earlier this week, Argentina struck a deal to access $6.5 billion worth of yuan as part of its swap deal.
China has been encouraging the use of yuan-denominated „panda bonds” issued by foreign companies in Chinese markets.
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