|IFC and StanChart back China trade finance through 3b yuan facility
World Bank’s private sector investment arm, IFC, and Standard Chartered bank have signed a risk sharing facility, which will help increase the amount of yuan-denominated trade finance in emerging markets, an IFC statement said.
The service will be available to Chinese banks, as well as corporates and businesses in China and across Asia and other emerging markets.
This marks IFC's first venture into yuan-denominated cross-border trade finance.
The facility of up to 3 billion yuan is funded with US$250 million from Standard Chartered and US$100 million from IFC in a 50:50 risk participation agreement.
An additional US$100 million will be provided by Korea Development Bank, as well as US$50 million from Swiss Re Corporate Solutions.
During the three-year life of the program, it is expected to finance trade flows exceeding US$6 billion, according to IFC.
“ith 28 percent of China's international trade expected to be denominated in the RMB by 2020, we are confident that this program will play a key role in enabling trade in a currency that is heralding major changes in the financial system," said Standard Chartered Group chief executive Peter Sands.
By reducing trading costs and increasing the participation of smaller, under-represented banks in the yuan trade finance market, this investment will allow suppliers of agricultural products, equipment and other essential goods to reach new markets, said IFC Executive Vice President and chief executive Cai Jinyong.
Over the past three years, yuan trade finance has accelerated significantly with an increasing proportion of China's trade now settled in the currency.
The yuan gained slightly today against the US dollar at 6.0714 compared with 6.0715 at the previous close. —Xinhua