(Bloomberg) -- A senior US Treasury official called out China for a lack of transparency with its foreign-exchange swap lines, and urged the International Monetary Fund to be wary of simply including them in its calculations of official reserves for developing nations.
The remarks Tuesday by Brent Neiman, the deputy undersecretary for international finance at the Treasury Department, follow recent bilateral engagement by the US with China with regard to the People’s Bank of China swap lines.
“A lack of reporting by the PBOC on the details of each of its swap arrangements” has led to “confusing and inconsistent treatment” by the IMF of these agreements, Neiman said in remarks prepared for an event hosted by the Official Monetary and Financial Institutions Forum.
The PBOC has entered a raft of agreements with other emerging and developed market countries over time, part of a broader venture to promote an international role for the yuan. Argentina has been prominent in drawing on its swap line with China as it battled an economic and financial crisis.
PBOC swap lines “often come with opaque restrictions on their use and potentially do not satisfy the IMF’s rule that reserve assets must be ‘readily available and controlled by the monetary authorities,’” Neiman said.
‘Onerous Restrictions’
Any arrangements “that carry onerous use restrictions or where the terms are not publicly disclosed are also not generally in line with” the US’s vision for global debt and development finance, he said.
China’s swap lines were on the agenda of topics for the so-called Financial Working Group meeting in August of senior US and Chinese economic officials.
Neiman said that the IMF have accounted in different ways for the PBOC swap lines for different countries, citing cases from Sri Lanka, Laos, Suriname and Argentina. For example, while in Sri Lanka the lines were termed “currently unusable,” in Laos fund staff indicated it was “uncertain” whether the assets were tied to certain purposes, he said.
IMF treatment “should be consistent and compliant with its stated policy when it calculates reserves, analyzes debt sustainability, and secures financing assurances,” Neiman said.
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