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BEIJING, Feb 16 (Reuters) – China will work with Asian countries to boost the use of its currency in trade and investment, the People’s Bank of China Governor Yi Gang said on Wednesday, as part of a plan to strengthen regional economic resilience.
Yi Gang told a Group of 20 (G20) event that advances in the use of local currencies in trade and investment in emerging Asian countries in recent years have strengthened the region’s financial safety net against external shocks.
“Emerging markets should improve their resilience,” Yi Gang said via video at the event hosted by Indonesia. “This is where regional cooperation can play a key role.”
Bilateral currency swaps between ASEAN and China, Japan and South Korea have reached $380 billion, he said.
Last month, the People’s Bank of China and Bank Indonesia renewed the bilateral local currency swap agreement with a swap scale of 250 billion yuan/550 trillion rupiah. The agreement is valid for three years to further deepen China-Indonesia monetary and financial cooperation and promote bilateral trade and investment facilitation,
“Central banks in developed countries should continue to strengthen market communication,” Yi Gang added, as this will help mitigate spillovers at a time when the new crown epidemic poses greater risks to emerging economies.
Analysts believe China and other emerging economies could face the risk of capital outflows once the U.S. Federal Reserve begins to tighten policy.
Yi Gang added that China will maintain a prudent monetary policy with moderate flexibility, and the economy may return to its potential growth rate this year. (Finish)
Compiled by Li Shuang; edited by Zhang Mingjun