Local currencies used in cross-border trade and investment activities would help reduce foreign exchange costs, mitigate currency risks, facilitate trade and investment, boost national economic growth, as well as provide a strong driving force for the common development of the world economy, said Tao Ling, deputy governor of the People's Bank of China.
SAO PAULO, Nov. 14 (Xinhua) -- Local currency cooperation among Global South nations has broad prospects and great potential, as closer South-South trade ties have spurred the demand for local currency settlements, officials and experts from China and Brazil have said.
In a video address to the Global South Local Currency Cooperation Forum held on Tuesday, Tao Ling, deputy governor of the People's Bank of China, said that local currencies used in cross-border trade and investment activities would help reduce foreign exchange costs, mitigate currency risks, facilitate trade and investment, boost national economic growth, as well as provide a strong driving force for the common development of the world economy.
Tao noted that the People's Bank of China looks forward to strengthening communication and collaboration with the central banks of Global South nations and creating a better market and institutional environment for cooperation in local currencies by adhering to marketization and rule of law.
The Global South accounts for over 40 percent of the world's economy, representing a key force in global economic growth.
Tatiana Rosito, secretary for international affairs at the Brazilian Ministry of Finance, noted that "in the context of reducing transaction costs and promoting financial integration between the two countries," Brazil's National Treasury is planning to issue Panda bonds to access the Chinese capital market, which offers lower interest rates than traditional dollar markets.
"Through the use of local currencies, the integration of capital markets and the promotion of sustainable investments, we are opening up new opportunities for Brazilian and Chinese companies and investors," she said.
Fausto Pinato, president of the Brazil-China Parliamentary Front of the Brazilian National Congress, said that the use of local currencies in cross-border trade benefits both Brazil and China as it would reduce dependence on the U.S. dollar, increase monetary autonomy, and promote economic growth in both countries.
Zhang Baojiang, president of the Bank of Communications, one of China's five largest commercial banks, said that the bank will speed up innovation in local currency financing, improve financing efficiency, lower financing costs, and promote high-quality development of Global South cooperation with better and more efficient financial services.
At the forum, Xinhua Institute and Shanghai Headquarters of China Economic Information Service jointly issued a research paper titled "Bridging Distances, Fostering Prosperity: Innovation in Local Currency Cooperation Among Global South Nations."
The report provides a comprehensive analysis of local currency cooperation practices in selected Global South nations, particularly BRICS countries.
The report also explores ways and directions to further expand the depth and breadth of local currency cooperation, offering useful suggestions for promoting high-quality development of local currency cooperation in the Global South.
The forum, organized by China Economic Information Service of Xinhua News Agency, attracted about 200 participants from financial institutions, enterprises, government departments, media organizations and think tanks in the Global South. ■