World Bank dollar lifeline for Pacific islands proceeds with US, Australia push
By Lucy Craymer and Lewis Jackson
WELLINGTON/SYDNEY, July 15 (Reuters) -The World Bank is preparing a financial lifeline for Pacific Island nations, backed by the U.S. and Australia, as an exodus of Western banks from the unprofitable market prompts concern that China could fill the vacuum in the strategic region.
Without a backstop, many of the 18 small countries and territoriesof the Pacific Islands Forum, spanning 30 million square km (10 million square miles) of ocean, risk being cut off from global finance as Western banks leave the less-developed region, a situation an Australian official involved in the plan called "Armageddon".
The $77 million proposal would initially enable emergency access to dollars or other major currencies that the far-flung island nations would need for trade and remittances if Western banks cut ties, the World Bank said in an email.
The region, which Washington has long considered its maritime neighbourhood, is caught in a superpower battle for influence as China makes steady advances.
Nauru, Solomon Islands and Kiribati switched diplomatic recognition from Taiwan to Beijing in recent years, and the Solomon Islands has struck security and policing pacts with China that sparked alarm in the U.S. and Australia.
Banking curbs after the 2008 financial crisis have made Western lenders cautious about ties to the Pacific, where banks and regulators often lack the resources to find and prosecute financial crimes, raising the risk that banks get embroiled in embarrassing and expensive scandals.
There is also little prospect of profit from the region's tiny, remote populations to entice banks to bear the cost of helping raise compliance standards.
CHINESE INTEREST AS WESTERN BANKS EXIT
"The proposed World Bank project is a creative way of addressing the challenge of de-risking and small scale in Pacific Island countries," said Lalita Moorty, the World Bank's East Asia and Pacific director for prosperity.
Without access to overseas banks, Pacific countries would struggle to receive remittances - a key component of their economies - welcome holidaymakers or trade with the wider world. Already as competition wanes, the cost of remittances has increased to some of the highest globally.
"It can create instability for the financial system," said Denton Rarawa, senior economics adviser at the Pacific Islands Forum.
Between 2011 and 2022, the region lost 60% of its correspondent banking relationships, where Western banks partner with local ones to enable transactions in international currencies.
ANZ Bank has sold assets in Papua New Guinea, Westpac tried to sell its Pacific business and Nauru's only lender, Australia's Bendigo Bank, announced plans to leave in 2025.
China may be seeking to fill that gap.
Bank of China has opened an office in Papua New Guinea and signed a memorandum of understanding with Nauru to look at how they could step in if Bendigo Bank leaves. Vanuatu last week asked Bank of China to set up a branch.
Bank of China did not respond to a request for comment.
Chinese banks have in recent years expressed interest in the Solomon Islands, Tonga and Samoa, the central bankers of those countries told Reuters, although nothing has eventuated.
'LIGHT AT THE END OF THE TUNNEL'
"We're well aware of the geostrategic interest of our region between U.S., China and Australia," said Cook Islands Prime Minister Mark Brown, the current chair of the Pacific Islands Forum.
"What we're saying is that if you're not going to address concerns and issues we have, Pacific countries will start looking elsewhere for support."
The U.S. and Australia were spurred to act against the festering problem in the past two years by planned exits like Bendigo's and concern that China could step in, said three officials who asked not to be identified because they were not authorised to speak to media.
A delegation of more than 20 U.S. Treasury and Federal Reserve officials flew in for a conference in Brisbane last week with Australian and Pacific Islands officials, opened by a video message from Treasury Secretary Janet Yellen.
Under the plan, the World Bank will also study ways to make the Pacific Islands more attractive to global banks, including a mechanism to aggregate payments from various countries to help achieve economies of scale, the World Bank said in a statement.
The Washington-based global lender's board is expected to approve the plan within a few months. Commercial banks will bid to run the facility, which can be used in an emergency to process transactions in dollars and other currencies.
Countries will be charged to use the facility so it does not undercut private providers. They will also need to meet standards on financial crimes regulation.
The U.S. and Australian effort convinced at least some conference attendees that after more than a decade of talk, a solution is close.
"We can see the light at the end of the tunnel," Reserve Bank of Fiji Governor Ariff Ali told Reuters. "I'm confident we'll find a solution and I'm confident we're making progress."
Reporting by Lewis Jackson in Sydney and Lucy Craymer in Wellington; Additional reporting by Ziyi Tang in Beijing; Editing by William Mallard
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
