US, Australia commit to better Pacific banking as China influence grows

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U.S. and Australian officials reaffirmed their commitment to improving financial connectivity in the Pacific as regional lenders and policymakers gathered to discuss enhancing banking services.

This comes as Western banks withdraw, limiting access to U.S. dollar-denominated accounts and opening opportunities for Chinese banks.

Australian Assistant Treasurer Stephen Jones highlighted Canberra’s intent to be the preferred partner in both banking and defense, while U.S. Treasury Undersecretary Brian Nelson stressed the importance of deepening engagement with Pacific allies.

The Pacific Banking Forum in Brisbane underscored growing Western concerns about China’s increasing influence in the region.

Beijing has been actively signing defense, trade, and financial deals, with the Bank of China expanding its presence.

While no detailed announcements were made, the forum emphasized the strategic importance of financial connectivity and resilience for Pacific Island countries facing de-risking by Western banks.

U.S. Treasury Secretary Janet Yellen, addressing the forum virtually, reiterated Washington’s commitment to supporting the Pacific’s economic resilience through enhanced access to correspondent banks.

She emphasized the broader benefits of a strong and connected Pacific region for both the U.S. and the global economy.

The World Bank and Asian Development Bank are also working on programs to improve banking relationships, as correspondent banking ties in the Pacific have declined significantly.

(Reuters)

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