BRISBANE (Reuters) – The United States is committed to promoting “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 of strategic importance to Washington, as Washington has increased its engagement and efforts to support Pacific island countries in order to limit 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 cooperation with our allies and partners to enhance financial connectivity, investment, and integration,” said Brian Nelson, Under Secretary of the Treasury, who is in charge of the Treasury’s Office of Terrorism and Financial Intelligence, speaking at the two-day Pacific Banking Forum co-hosted by the United States and Australia.
Pacific island nations are facing challenges as major banks end longstanding relationships with their Pacific counterparts, limiting countries’ access to US dollar-denominated bank accounts. Banks are reducing risk to meet financial regulations, but the trend is undermining Pacific island nations’ financial resilience, experts say.
Nelson told those present at the meeting that the United States recognizes and is committed to addressing the issue of reducing banking risks across the Pacific.
“There is much to gain by promoting financial integration around the world,” he added. “But conversely, when correspondent banking relationships diminish, the consequences can be dire.”
Nelson said data shows that the number of correspondent banking relationships in the Pacific has declined at twice the global rate over the past decade. The World Bank and the Asian Development Bank are working on programs to improve correspondent banking relationships.
US Treasury Secretary Janet Yellen said in a video address to the meeting that the US focus is on supporting the economic resilience of the Pacific region, including by enhancing access to correspondent banks.
“The United States is committed to a free, open, interconnected, prosperous, secure, and resilient Indo-Pacific,” she added. “A strong, interconnected Indo-Pacific benefits the United States and the global economy.”
(This story has been corrected to correct the spelling of Janet Yellen’s name in paragraph 8.)