The United States and China recently signed new agreements to strengthen cooperation on financial stability, as confirmed by the People’s Bank of China (PBOC) on Monday. These agreements were a result of a meeting of the U.S.-China Financial Working Group in Shanghai last Thursday and Friday.
The discussions were led by Brent Neiman, Deputy Under Secretary for International Finance at the U.S. Treasury Department, and Xuan Changneng, Deputy Governor of the PBOC. Representatives from important 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 were also present.
The PBOC characterized the talks as professional, practical, candid, and fruitful, focusing on crucial topics like capital markets, cross-border payments, and monetary policy. These discussions were particularly significant following China’s recent Third Plenary Meeting, which paved the way for further economic and financial reforms.
One key outcome of the meeting was the sharing of contact lists to handle financial stress or risk events, aimed at facilitating rapid communication between the two nations during potential financial crises. Technical experts from both sides discussed the resilience of each country’s systematically important banks and financial institutions, as well as the progress of climate risk stress testing.
These meetings took place amidst increased volatility in China’s government bond market, which experienced heightened instability earlier in the month due to reported PBOC intervention. However, PBOC Governor Pan Gongsheng mentioned on Thursday that financial risks, including those from local government debt, have decreased since then.
In addition, U.S. and Chinese financial institutions convened their inaugural roundtable meeting under the working group framework, exploring collaboration opportunities and the role of finance in supporting sustained growth.
The economic and financial working groups were established by U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier He Lifeng in September 2023, aiming to foster regular communication between U.S. Treasury officials and their counterparts at the Ministry of Finance and the PBOC, thereby bolstering bilateral financial cooperation.
These agreements and discussions signify a significant advancement in enhancing financial stability and collaboration between the world’s two largest economies.
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