World Bank Planning To Issue Yuan-Denominated
Bonds
The World Bank is now in discussions with the People's
Bank of China, China's central bank, to issue Chinese
yuan-denominated bonds before December of this year. If
approved, this would be the first time that China has
approved the issuance of bonds denominated in China's
currency by an international organization.
The World Bank plans to issue the bonds to help finance
infrastructure development projects in China, and plans
to issue them through its development arm, International
Finance Corp., and other international development
organizations. International Finance Corp. has taken an
active role in China, actively participating in restructuring
China's financial sector.
Current discussions between the World Bank and the People's
Bank of China focus on the number, time of issuance and
terms of the bonds. Most bonds offered by the World Bank
are denominated in US dollars. If the Chinese government
in the future decides to let the Chinese yuan rise against
the US dollar, buyers of yuan-denominated bonds would
be affected less than buyers of US dollar bonds.
By issuing yuan-denominated bonds, the World Bank hopes
to encourage greater economic integration between the
Chinese yuan, US dollar, Japanese yen and euro blocs,
and indirectly, greater currency exchange rate stability.
It is believed that in addition to the World Bank, the
Asian Development Bank is also considering issuing yuan-denominated
bonds.
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