Australia Increases Pacific Investments to Counter Chinese Influence Amid Bank Withdrawal

Australia pledges $4.3 million to enhance financial systems in Pacific Island countries due to the withdrawal of Western banks. The investment aims to mitigate the region's dependence on China's increasing influence, support compliance with anti-money laundering rules, and maintain access to the global financial network.

Australia has committed $4.3 million to bolster the financial systems of Pacific Island nations as Western banks retreat, citing risks and regulatory challenges. This move comes as China seeks to expand its influence in the region.

Australia's Treasurer, Jim Chalmers, highlighted the critical nature of this support at the Pacific Banking Forum in Brisbane, noting the severe impact of losing correspondent banking services on the region's global engagement. Between 2011 and 2022, the Pacific lost around 80% of its U.S. dollar-denominated banking relationships.

Assistant Treasurer Stephen Jones detailed Australia's financial package, which includes secure digital identity infrastructure and enhanced compliance with anti-money laundering regulations. U.S. Treasury Secretary Janet Yellen emphasized Washington's support for the Pacific's economic resilience. Despite the challenges, Australia's ANZ bank, the biggest lender in the Pacific, is seeking ways to sustain its operations in the region.

(With inputs from agencies.)