Strengthening Financial Ties: U.S. Commits to Boosting Pacific Connectivity

In a strategic move to counter China's growing influence in the Pacific region, the United States has pledged to deepen its engagement and collaboration with allies and partners to bolster financial connectivity, investment, and integration. This commitment was made by a senior U.S. Treasury official during a Pacific Banking Forum in Brisbane, where financial institutions and government officials gathered to address the region's banking challenges.

Unlocking the Pacific's Economic Potential through Robust Financial Ties

Addressing the Challenges of Bank De-risking

The Pacific region has faced significant challenges as major banks have been ending long-term relationships with their Pacific counterparts, limiting the countries' access to U.S. dollar-denominated bank accounts. This trend, driven by financial regulations and de-risking efforts, has undermined the financial resilience of Pacific Island countries, according to experts. The U.S. Treasury Undersecretary, Brian Nelson, acknowledged this issue and stated that the U.S. is committed to addressing bank de-risking across the Pacific.

Promoting Financial Integration and Connectivity

Nelson emphasized the importance of promoting financial integration around the world, stating that the consequences of declining correspondent banking relationships can be substantial. Data suggests that over the past decade, the number of correspondent banking relationships in the Pacific has declined at twice the rate of the global average. To address this, the World Bank and Asia Development Bank are working on programs to improve corresponding banking relations in the region.

Strengthening Economic Resilience and Prosperity

U.S. Treasury Secretary Jane Yellen, in a virtual address to the Pacific Banking Forum, reiterated the U.S. commitment to supporting the Pacific region's economic resilience, including through strengthening access to correspondent banks. Yellen stated that a strong and connected Pacific region has benefits for the United States and the global economy, underscoring the strategic importance of the region to Washington.

Countering China's Influence and Promoting a Free and Open Indo-Pacific

The Pacific region is considered strategically crucial to the United States, and the country has increased its engagement and efforts to support Pacific Island countries as it aims to curb the growing influence of China in the region. The U.S. commitment to bolstering financial connectivity, investment, and integration in the Pacific is seen as a key part of its broader strategy to maintain a free and open Indo-Pacific.

Fostering Collaboration and Strengthening Partnerships

The Pacific Banking Forum, co-hosted by the U.S. and Australia, provides a platform for financial institutions and government officials to come together and address the region's banking challenges. This collaborative approach reflects the U.S. desire to work closely with its allies and partners to support the economic and strategic interests of the Pacific region.Overall, the U.S. commitment to strengthening financial connectivity in the Pacific is a significant step in its efforts to counter China's influence and promote a free and open Indo-Pacific. By addressing the challenges of bank de-risking and fostering greater financial integration, the U.S. aims to unlock the economic potential of the region and strengthen its strategic position in the global arena.