Chinese currency could safeguard Caribbean’s access to financial services, says CDB

The Chinese renminbi may be able to protect the Caribbean region’s access to global finance services, the president of the Caribbean Development Bank (CDB) has said.

This protection comes as many international financial instructions withdraw their offerings from the region.

William Warren Smith made the claims at a conference in Barbados earlier this month. The aim of the conference was to explore opportunities for trade, aid and investment between the Caribbean and China.

“The conference comes at a time when the ability of many Caribbean countries to engage in international trade and financial services is being undermined by the withdrawal of correspondent banking services by North American and European financial institutions,” he said.

“An urgent resolution of the dilemma is required."

‘Win-win strategy’

Smith highlighted the partnership between China and the Caribbean, which has been growing in recent decades.

“China has itself been successfully undergoing major economic transformation built on the win-win strategy of opening-up for common prosperity,” he said.

“It is that strategy that helps to explain the strengthening of China-Caribbean diplomatic ties and our increasing engagement in the areas of investment, contracted projects, and bilateral trade over the past two to three decades.”

One of the spin-off benefits of the transformation taking place in China is the rapid internationalisation of the renminbi, starting in 2006 with the floating of the exchange rate.”

One of the region’s leading economists told WIC News that working with China has its benefits but that the region “must not oversell itself to the powerhouse” and lose any independence.

Untraditional partner

As an International Monetary Find reserve currency, the renminbi is now in the IMF’s special drawing rights basket, which determines currencies that countries can receive as part of IMF loans.

The other currencies in the basket are the US dollar, the euro, the yen and British pound

Ambassador of the People’s Republic of China to Barbados, Wang Ke, said China is continuing to build economic and diplomatic partnerships in the Caribbean, noting that the country welcomes further cooperation efforts.

“In the wake of the 2008 financial crisis many Caribbean countries have struggled with bottlenecks such as having indebtedness, difficult access to finance and insufficient connectivity,” he said.

“And with addition of rising global protectionism and uncertainties between the Caribbean and its traditional partners, the Caribbean countries are facing more challenges in achieving sustainable growth.

“China is working on building new international relations based on cooperation and mutual benefit and stands ready to strengthen global cooperation with the Caribbean countries.”

China has been a member of CDB since 1998.