The United States and China have recently completed new agreements to enhance cooperation on financial stability, as confirmed by the People’s Bank of China (PBOC) on Monday. These agreements resulted from a meeting of the U.S.-China Financial Working Group held in Shanghai last Thursday and Friday.
The talks were led by Brent Neiman, Deputy Under Secretary for International Finance at the U.S. Treasury Department, in collaboration with Xuan Changneng, Deputy Governor of the PBOC. Representatives from major financial institutions such as the Federal Reserve, the U.S. Securities and Exchange Commission, the National Financial Regulatory Administration, and the China Securities Regulatory Commission participated as well.
The PBOC characterized the discussions as professional, realistic, open, and fruitful, focusing on crucial topics like capital markets, cross-border payments, and monetary policy. These discussions were particularly significant in light of China’s recent Third Plenary Meeting, which laid the groundwork for further economic and financial reforms.
A key outcome of the meeting was the sharing of contact lists to tackle financial difficulties or risk events, designed to facilitate rapid communication between the two nations during potential financial crises. Technical experts from both countries assessed the stability of each nation’s systematically significant banks and financial institutions, along with progress in climate risk stress evaluations.
These gatherings took place against the backdrop of increasing volatility in China’s government bond market, which experienced heightened instability earlier this month due to reported PBOC intervention. However, PBOC Governor Pan Gongsheng noted on Thursday that financial risks, particularly concerning local government debt, have lessened since that period.
Additionally, U.S. and Chinese financial institutions conducted their inaugural roundtable discussion under the framework of the working group, exploring opportunities for cooperation and the finance sector’s role in promoting sustainable growth.
The economic and financial working groups were initiated by U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier He Lifeng in September 2023, aiming to foster continuous dialogue between U.S. Treasury officials and their counterparts at the Ministry of Finance and the PBOC, thereby enhancing bilateral financial collaboration.
These agreements and talks signify a notable advancement in fostering financial stability and cooperation between the two largest economies globally.
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