Publication:
China as an International Lender of Last Resort

dc.contributor.author Horn, Sebastian
dc.contributor.author Parks, Bradley C.
dc.contributor.author Reinhart, Carmen M.
dc.contributor.author Trebesch, Christoph
dc.date.accessioned 2023-03-28T16:40:54Z
dc.date.available 2023-03-28T16:40:54Z
dc.date.issued 2023-03-28
dc.description.abstract This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. It builds the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent. en
dc.identifier http://documents.worldbank.org/curated/en/099450403272313885/IDU046bbbd8d06cc0045a708397004cbf4d2118e
dc.identifier.uri https://openknowledge.worldbank.org/handle/10986/39605
dc.language English
dc.language.iso en
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Papers; 10380
dc.rights CC BY 3.0 IGO
dc.rights.holder World Bank
dc.rights.uri https://creativecommons.org/licenses/by/3.0/igo/
dc.subject DEBT
dc.subject BELT AND ROAD INITIATIVE
dc.subject RESCUE LENDING
dc.subject CENTRAL BANKS
dc.subject OVERSEAS LENDING PRACTICES
dc.subject SWAP LINE
dc.title China as an International Lender of Last Resort en
dc.type Working Paper
dspace.entity.type Publication
okr.crossref.title China as an International Lender of Last Resort
okr.date.disclosure 2023-03-27
okr.date.lastmodified 2023-03-27T00:00:00Z en
okr.doctype Policy Research Working Paper
okr.doctype Publications & Research
okr.docurl http://documents.worldbank.org/curated/en/099450403272313885/IDU046bbbd8d06cc0045a708397004cbf4d2118e
okr.guid 099450403272313885
okr.identifier.doi 10.1596/1813-9450-10380
okr.identifier.externaldocumentum 34029631
okr.identifier.internaldocumentum 34029631
okr.identifier.report WPS10380
okr.import.id 273
okr.imported true en
okr.language.supported en
okr.pdfurl http://documents.worldbank.org/curated/en/099450403272313885/pdf/IDU046bbbd8d06cc0045a708397004cbf4d2118e.pdf en
okr.region.country China
okr.topic Macroeconomics and Economic Growth :: Economic Adjustment and Lending
okr.topic Finance and Financial Sector Development :: Debt Markets
okr.topic Infrastructure Economics and Finance :: Infrastructure Finance
okr.topic Finance and Financial Sector Development :: Banks & Banking Reform
okr.unit Off of Sr VP Dev Econ/Chief Econ (DECVP)
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