Dilma Rousseff, president of the New Development Bank, speaks during the forum titled Chinese Modernization and the World held at The Grand Halls in Shanghai, April 21, 2023. (PHOTO / AP)
Hong Kong is a strategic financial hub of fundraising for the New Development Bank, with the bank's strategy being to tap local currencies in bond issuance and to expand the base of member countries in order to improve the sustainability and stability of development projects, NDB President Dilma Rousseff said.
Speaking to China Daily in an exclusive interview on the sidelines of an event organized by the International Finance Forum, the Hong Kong Monetary Authority and the Hong Kong Academy of Finance in the city on Friday, Rousseff said the NDB will focus more on the Asian financial market in the future.
At the end of April, the New Development Bank raised $1.25 billion from the global financial market, with 65 percent of the purchases coming from Asia
The bank will diversify bond issuance in different local currencies in order to prioritize the Asian financial market, she said. "As a strategic financial hub, Hong Kong has a concentration of all major banks from the Chinese mainland, the United States and Europe. The NDB can find all sources of capital in Hong Kong."
According to Rousseff, the NDB's second strategy is to expand its base by attracting partnerships with other countries. By issuing bonds in different local currencies, other developing countries can expand their access to the global financial market.
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"Hong Kong will play an ever greater role for the NDB because the city is the financial crossroads of the world — all financial institutions and different currencies meet here. The city has a very diverse capital, credit and currency market," she said.
"We would like to build partnership with the financial system of Hong Kong. We would like to put Hong Kong in the center of the NDB strategy map," she added.
At the end of April, the NDB raised $1.25 billion from the global financial market, with 65 percent of the purchases coming from Asia. "Of this 65 percent, about half came from Hong Kong and another 10 percent from the mainland. There were no purchases from North American investors," she said, emphasizing the key role Hong Kong plays in the sector.
With headquarters in Shanghai, the NDB is a multilateral development bank established by Brazil, Russia, India, China and South Africa with the purpose of mobilizing resources for infrastructure and sustainable development projects in emerging markets and developing countries. The bank started operations in 2015.
Rousseff said the major advantage of tapping into local currencies, instead of the US dollar and the euro, for project financing is that it can reduce exchange rate risks and the effects of monetary policies practiced by developed countries.
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Dilma Rousseff, president of the New Development Bank, speaks during an exclusive interview with China Daily on May 5, 2023. (ANDY CHONG / CHINA DAILY)
With the rapid increase of trade among different countries, the deepening of the domestic capital market in emerging economies and the building of mutual safety nets against shocks resulting from changes in US monetary policy, the increasing adoption of local currencies to raise funds for infrastructural and sustainable projects is warranted, she said.
Expanding financing in local currencies can enable loan concessions without sovereign guarantee requirements and make project financing viable. As a result, it can diversify the funding base and strengthen the local financial market, according to Rousseff.
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The mainland and Hong Kong will together be a big driver of global growth amid difficulties and challenges such as geopolitical tensions, the rise of inflation and interest rates, and the banking crisis in the US, she said.
"Besides the fundraising function, Hong Kong has established networks of production and innovation, and it is also an important trade center. Hong Kong has the dynamic combination of the three pillars of finance, technology and trade that provides the sources of development," Rousseff added.