BRISBANE (Reuters) – The United States is committed to boosting “financial connectivity, investment and integration,” a senior U.S. Treasury official told a Pacific Banking meeting in Brisbane on Monday, where financial institutions and government officials are meeting to try to improve banking facilities in the region.
The Pacific region is considered strategically crucial for Washington and it has stepped up its engagement and efforts to support Pacific island countries in their aim to curb China’s growing influence in the region.
“We recognize the economic and strategic importance of the Pacific region, and we are committed to deepening our engagement and collaboration with our allies and partners to drive financial connectivity, investment and integration,” said Treasury Under Secretary Brian Nelson, who heads the department’s Terrorism and Financial Intelligence office and spoke at the two-day Pacific Banking Forum that the United States is co-hosting with Australia.
Pacific island countries are facing challenges as major banks end long-term relationships with their Pacific counterparts, limiting countries’ access to US dollar-denominated bank accounts. Banks are reducing their risks to comply with financial regulations, but the trend undermines Pacific island countries’ financial resilience, experts say.
Nelson told attendees at the meeting that the United States recognizes and is committed to addressing banking risk reduction across the Pacific.
“There is much to be gained by promoting financial integration around the world. But, conversely, when correspondent banking relationships decline, the consequences can be substantial,” he added.
Nelson said data suggests that over the past decade the number of correspondent banking relationships in the Pacific had declined at twice the global average. The World Bank and the Asian Development Bank are working on programs to try to improve correspondent banking relationships.
U.S. Treasury Secretary Janet Yellen said in a virtual address at the meeting that the U.S. focus was on supporting the economic resilience of the Pacific region, including by strengthening access to correspondent banks.
“The United States is committed to a free and open, connected, prosperous, secure, and resilient Indo-Pacific. A strong and connected Pacific region has benefits for the United States and the global economy,” he said.
(This story has been corrected to correct the spelling of Janet Yellen’s name in paragraph 8.)