China signs yuan-denominated loans for Belt and Road Initiative, accelerating de-dollarization
- China signed a series of yuan-denominated loans at the Belt and Road Initiative forum on Wednesday.
- The latest BRI loans marked another shift away from the greenback.
China's policy banks signed a series of yuan-denominated loans Wednesday at the latest Belt and Road Initiative forum in Beijing.
Beijing's yuan lending spree marks another step to internationalize the yuan and de-dollarize global finance, while also contrasting with its prior BRI loans, which were mostly denominated in greenbacks.
The yuan-based loans at the BRI meeting included contracts signed by the 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 Saudi National Bank. And with the help of the Bank of China, Egypt issued $479 million worth of panda bonds for the first time to help pay back its foreign loans.
Beijing also set aside 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 that Beijing uses to advance its long-term goals, such as the BRI. The massive infrastructure campaign was established a decade ago by President Xi Jinping to extend China's ties to markets around the world.
China's goal to dethrone the dollar is another policy priority, and fresh data from the SWIFT international banking system revealed that the yuan accounted for a record 3.71% of international payments in September. Still, it's minuscule compared to the dollar's 46.6% share.
Meanwhile, China has signed bilateral currency swap agreements with 20 partner countries and established yuan-clearing arrangements in 17, according to a white paper released before the Belt and Road meeting.
Earlier this week, Argentina struck a deal to access $6.5 billion worth of yuan as part of its swap agreement.
China has also been encouraging the use of the yuan through "panda bonds" — notes issued by foreign entities in the Chinese markets.