Belt and Road to tap local currencies, says PBOC's deputy governor

Yi Gang, deputy governor of the People's Bank of China, speaks at a news conference in Beijing, March 10, 2017. [Photo/Xinhua]

Belt and Road projects are encouraged to use local currencies in investment and finance to cut problems associated with exchange rate fluctuations, said Yi Gang, deputy governor of the People's Bank of China (PBOC).

By using local currencies, countries along the routes can tap into domestic savings and ensure financial stability, he told People's Daily in an interview on Thursday.

China aims to provide a platform for financial connectivity where participants can share profits and risks, Yi said.

"Although infrastructural projects along the routes tend to have a longer investment horizon, most are commercially profitable. The financial institutions operate under market rules," the deputy governor was quoted as saying.

Yi echoed remarks made by central bank governor Zhou Xiaochuan last week in promoting usage of local currencies.

Such suggestion comes as nations along the Belt and Road are closer knitted than ever through financial cooperation. According to data by the PBOC, nine Chinese banks have set up subsidiaries in 25 countries along the routes, while 54 commercial banks from 20 countries have established theirs in China by the end of last year.

China has signed currency swap agreements with 21 countries along the Belt and Road, six of which have RQFII (RMB Qualified Foreign Institutional Investors) quota.

Direct currency trade and settlement can lower exchange rate risk and make investments more convenient, Yi said. "Financial cooperation will enable China and countries along the routes to open and integrate further in a broader scope."