China Willing to Buy Up to $50 Billion in IMF Bonds

[Coventina]

Source: Wall Street Journal

BEIJING – China said Friday it is willing to buy as much as $50 billion in bonds issued by the International Monetary Fund, part of a deal made by the world's major economies earlier this year to boost the resources the global agency has to combat financial crises.

The statement by a State Administration of Foreign Exchange official is the first official indication from China of how much it might put into the IMF. U.K. Prime Minister Gordon Brown said at the summit of the Group of 20 nations in early April that China could buy $40 billion in bonds, as part of a planned increase of $500 billion in IMF resources. China indicated at the time that it might be willing to provide more funding for the IMF, but didn't offer specifics.

"If the final terms of the bond issue meet the requirements of our foreign exchange reserves for safety and appropriate return, we are willing to actively consider investing no more than $50 billion in bonds issued by the IMF," the official Xinhua news agency quoted the official at the foreign exchange administration as saying. The agency, part of China's central bank, manages nearly $2 trillion in official reserves. It could not be reached for further comment, and Xinhua didn't provide a name for the official.

Japan has already made a $100 billion loan to the IMF, and the U.S. and Europe have promised similar sums. China and three of the other biggest emerging economies -- Brazil, Russia, and India – have made it clear they want to contribute to the IMF through a bond issue rather than more conventional funding channels. That would allow them to make a temporary contribution to the organization, avoiding permanent commitments while they negotiate for a larger formal voice in the IMF.



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