Beyond Payment Systems and Currency Swaps: Building an effective US strategy for financial engagement with China

​​​​This study group will explore ways in which China has been working to reshape the framework of its financial engagement with the United States and its allies.  In the years following the financial crisis of 2008-2009, China’s leadership has elevated financial and monetary policy to a top priority.  It has deployed several specific strategies in support of the broad objective of increasing its global financial influence.  China has sought to increase its authority within international organizations such as the WTO, IMF and World Bank, while also working to create new institutions it can control.  It has developed new cross-border payment systems.  China has used bilateral currency swap arrangements and financial transactions as well as regional economic agreements to encourage RMB-based trade.  It has become a leader in the development of central bank digital currencies.  China is also working to de-dollarize its foreign currency reserves.

To date, the United States has not developed a comprehensive, effective strategy for managing its financial engagement with China.  Arguably, the U.S. response to China’s efforts to internationalize the RMB and develop alternative payment systems that do not rely on the USD has been too weak.  The United States needs to develop a comprehensive financial engagement strategy that will affirm its interests and values, demonstrate its economic leadership and promote a stable relationship with China.        We will explore some of the core components that might support a more effective U.S. strategy.  For example, we will consider ways to maintain the USD as a strong reserve currency, measures to reduce the use of sanctions as a financial foreign policy tool, steps to modernize SWIFT, the possible use of different types of digital currencies, and efforts to reinforce constructive market connections with China.

This study group / discussion is open to all. Registration is not necessary.
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