australian dollar

In a bid to improve the banking services in the Pacific and counter China's increasing influence in the region, lenders and policymakers under the aegis of Australia and the U.S. are meeting in Brisbane.

Australia and the U.S. are co-hosting the two-day Pacific Banking Forum, which will have 300 participants, including representatives from Pacific countries, commercial banks and officials from the International Monetary Fund, The Northern Daily Leader reported.

During the meeting between Australian Prime Minister Anthony Albanese and U.S. President Joe Biden last year, the duo had decided on establishing the Pacific Banking Forum, Pacific Minister Pat Conroy said. "This is a really good opportunity - banking is one of the key pressure points in the Pacific," he told AAP.

Addressing the forum, Brian Nelson, the U.S. Treasury's undersecretary for terrorism and financial intelligence, expressed concern at the decline in correspondent banking relationships (CRB) in the region, which he claimed was at twice the rate of the global average, Reuters reported.

"There is a lot to be gained by promoting financial integration around the world," he added. "But conversely, when correspondent banking relationships dwindle, the consequences can be substantial," Nelson said.

Due to financial risks, the Western banks are exiting the region, limiting their access to U.S. dollar denominated accounts.

In April this year, the Bank of China signed a memorandum of understanding with the Pacific nation Nauru after its only bank, Australia's Bendigo bank, announced withdrawal by 2025. Nauru uses Australian currency and once China fills the vacuum, the Chinese currency will dominate over the Australian dollar.

Nelson pointed out that the financial integration was beneficial and stressed on improving bank de-risking across the Pacific. He added that the World Bank and Asia Development Bank were designing programs to boost CRB.