BEIJING -- An effective cooperation mechanism is required to be built among financial institutions in China under the Belt and Road (B&R) Initiative, suggested insiders.
Lian Ping, chief economist with the Bank of Communications, noted in the "Financial Street Forum 2016" held from May 28 to May 29 that deep implementation of the Belt and Road Initiative has provided golden opportunity for financial institutions, as booming infrastructure construction in the countries along the Belt and Road and rapid trade development between China and those countries will cultivate strong demand for medium- and long-term financing.
However, related risks cannot be ignored. "Because of long investment cycle and relatively low rate of return, infrastructure projects usually bear high operation risks. Moreover, as countries along the Belt and Road situate in different economic level and vary in culture, market risks, exchange rate risks and liquidity risks cannot be neglected," added Lian Ping.
Yang Zejun, chairman of the Board of Supervisors of Silk Road Fund, advised financial institutions to comprehensively use multiple financing means, including equity, bonds, funds, loans and credit insurance, as well as multi-currency portfolio, to serve the Belt and Road Initiative.
"An effective cooperation mechanism among financial institutions should be established in a bid to achieve the win-win result, while vicious competition should be avoided," added Yang.
Yang suggested that equity financing should play a bigger role in infrastructure projects.
Besides this, Silk Road Fund can cooperate with domestic and overseas financial institutions to jointly support Chinese enterprises in "going out," said Yang.
Lian Ping noted that financial institutions should not only enhance cooperation with their counterparts, but also keep communications with central ministries, local governments and global financial institutions so as to obtain systematic and all-around information to better rein in risks.
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