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Fears Pacific countries could lose banks

QUESTION TIME
Pacific leaders, Australian, US and New Zealand government officials, and banking executives will gather for a two-day Pacific Banking Forum in Brisbane, starting on Monday. Picture: NewsWire/ Martin Ollman

Concern that small Pacific nations may lose access to banking will be addressed at a forum starting on Monday, as China eyes ways to increase its influence in the region by filling the gap.

Leaders of several Pacific nations, global financial institutions, US Treasury officials and senior banking representatives will meet in Brisbane from Monday for a two-day Pacific Banking Forum to ensure the continued operation of services in the region.

The Australian government and the Biden administration have partnered to host the forum to seek to halt banking institutions from withdrawing from the small countries in the Pacific.

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Treasurer Jim Chalmers, who will deliver the keynote address on Tuesday morning, said preventing the loss of banking services in the Pacific is “vital to the safety, security and economic development of our region”.

“We have a strong connection with our brothers and sisters in the Pacific and we want to help them prosper into the future and that’s the focus of the Pacific Banking Forum,” he said.

“We’re bringing world leaders to Brisbane to address one of the biggest challenges facing our closest neighbours and friends.

“This is about making our part of the world as stable and prosperous as possible.”

QUESTION TIME
Treasurer Jim Chalmers said the withdrawal of banking services from the Pacific sparks safety, security and economic issues. Picture: NewsWire / Martin Ollman

In April, Nauru, which uses the Australian dollar as its currency, signed a Memorandum of Understanding (MOU) with the Bank of China after Adelaide Bank slated its exit by December this year.

Bendigo Bank had initially also flagged it was going to withdraw its services at the same time, however the timeline has now been extended by six months to June 2025.

This has prompted fears of increased influence from the Chinese Communist Party, with its state-owned bank already highlighting intentions to operate across Papua New Guinea, after establishing a presence in the capital Port Moresby.

The large-scale meeting was announced last October in a joint statement with Anthony Albanese and US President Joe Biden, promising to provide “new and additional technical assistance to improve the region’s access to financial services”.

US and Australian governments said it would work with Pacific countries to “costs and accessibility of correspondent banking relationships” based on the challenges presented in each country and territory, with the Pacific area reporting the fastest withdrawal of banking services worldwide.

Assistant Treasurer Stephen Jones said the forum reiterates Australia’s commitment to our Pacific partners.

“The Pacific Banking Forum demonstrates our commitment to work with our Pacific partners to establish a strong and sustainable environment for banking and payment services in the Pacific,” he said.