For many developing countries, renminbi-denominated loans offer a reliable, more accessible, and cost-effective alternative to borrowing in dollars. Now that the stability and predictability of US economic policies and institutions are in question, China’s currency is becoming more attractive.
BEIJING/BOSTON—The global development finance gap remains large, and developing countries need more options. According to the United Nations Trade and Development, developing countries face an annual shortfall of $4 trillion in achieving the Sustainable Development Goals. But in the post-war era, development finance was largely denominated in US dollars, resulting in changes in borrowing costs and debt burdens driven by US monetary policy and investor appetite in advanced economies.