(Reuters) - China is planning to extend renminbi loans to other major emerging BRIC countries, in another step toward the expansion of the yuan’s role in foreign exchange, the Financial Times reported on Wednesday.
The China Development Bank (CDB) will sign a memorandum of understanding at a meeting with its BRICs counterparts – Russia, South Africa, Brazil and India – in New Delhi on March 29, the newspaper reported, citing people familiar with the talks.
Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other BRICs nations’ development banks will also extend loans denominated in their respectivecurrencies, the FT said in an article published on its website.
The renminbi is the official currency of China and its primary unit is the yuan. Of the six largest economies in the world, China is the only one whose currency does not have reserve status.
The initiative aims to boost trade between the five BRICs nations and promote use of the renminbi, rather than the U.S. dollar, for international trade and cross-border lending, the FT said.
In the past few years Chinese authorities have begun to gradually internationalise the currency before fully liberalising China’s capital account.
Much of China’s banking system, however, remains regulated, and lending is largely controlled.
BNDES, Brazil’s development bank, and South Africa’s Finance Ministry were cited by the FT as saying they expected an agreement to be signed at the New Delhi meeting, which would include the lending pledge, with details to be ironed out during a summit.
“We will discuss the creation of structures and mechanisms for lending in local currencies in order to maximise economic and financial transactions between the countries that are members of the accord,” BNDES was quoted as saying.
Other signatories would include Russia’s Vnesheconombank, the Export-Import Bank of India and the Development Bank of Southern Africa, according to the article.