Publication:
China as an International Lender of Last Resort

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dc.contributor.authorHorn, Sebastian
dc.contributor.authorParks, Bradley C.
dc.contributor.authorReinhart, Carmen M.
dc.contributor.authorTrebesch, Christoph
dc.date.accessioned2023-03-28T16:40:54Z
dc.date.available2023-03-28T16:40:54Z
dc.date.issued2023-03-28
dc.description.abstractThis 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.identifierhttp://documents.worldbank.org/curated/en/099450403272313885/IDU046bbbd8d06cc0045a708397004cbf4d2118e
dc.identifier.doi10.1596/1813-9450-10380
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/39605
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10380
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectDEBT
dc.subjectBELT AND ROAD INITIATIVE
dc.subjectRESCUE LENDING
dc.subjectCENTRAL BANKS
dc.subjectOVERSEAS LENDING PRACTICES
dc.subjectSWAP LINE
dc.titleChina as an International Lender of Last Resorten
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleChina as an International Lender of Last Resort
okr.date.disclosure2023-03-27
okr.date.lastmodified2023-03-27T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099450403272313885/IDU046bbbd8d06cc0045a708397004cbf4d2118e
okr.guid099450403272313885
okr.identifier.doi10.1596/1813-9450-10380
okr.identifier.externaldocumentum34029631
okr.identifier.internaldocumentum34029631
okr.identifier.reportWPS10380
okr.import.id273
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099450403272313885/pdf/IDU046bbbd8d06cc0045a708397004cbf4d2118e.pdfen
okr.region.countryChina
okr.topicMacroeconomics and Economic Growth::Economic Adjustment and Lending
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicInfrastructure Economics and Finance::Infrastructure Finance
okr.topicFinance and Financial Sector Development::Banks & Banking Reform
okr.unitOff of Sr VP Dev Econ/Chief Econ (DECVP)
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