By Gu Yang
With the acceleration of Chinese enterprises' "Going out", the financial industry is becoming the powerful support to boost Belt and Road construction. Recently, under the guidance of the Belt and Road construction frame, the first commercial bank set abroad by our country- Silk Road International Bank was announced to be set up in Djibouti on the west bank of Gulf of Aden and this was the first time for China-invested enterprises to obtain the banking license on the African continent.
Djibouti is a strange country for most people, but in the eyes of Luo Feng, the Vice Chairman of Silk Road International Bank Board of Directors and the President of IZP Group, this magical land in the east Africa is a hot land that is full of hope-it is at the vital communication hub of Europe, Asia and Africa and is located at the throat where the Red Sea flowing into the Indian Ocean. It is not only the strategic area connecting the Asia, Europe and Africa markets, but also the key point for Belt and Road Initiative to construct the sea passage in the western front.
Presently, the financial infrastructure of Djibouti is relatively weak and there is not a set of complete national payment systems. The financial service deployment completely depends on the SWIFT (Society for Worldwide Interbank Financial Telecommunication) System under the cash and USD system and the banking business is basically at the phase of manual operation.
However, the local good financial investment environment makes Luo Feng a little excited: the political situation and the exchange rate are stable; there is a certain trade volume without foreign exchange control; it allows the free movement of capital and fully opens to the foreign capital; What's more, the development goal "Be the Financial Center of the East Africa and the Dubai of the Horn of Africa" put forward by Djibouti is highly consistent with the business orientation of the Big Data Technology and Cross-border Trade Finance Company of IZP Group.
The Silk Road International Bank was jointly initiated and set up by China-invested enterprises such as the IZP Group, China Merchants Group and Silk Road E-merchants Information Technology Co., Ltd. with the Ministry of Finance of Djibouti. It is the 13th local commercial bank set up at the approval of the Djibouti Central Bank. Among which, IZP Group is the major initiator and occupies 25 percent of the shares, so does the Ministry of Finance of Djibouti.
More businesses in Silk Road International Bank
"The short-term goal of the Silk Road International Bank is to develop into the biggest international bank and transactional bank of Djibouti within 5 years as well as to become the biggest card issuer in the East Africa," said Illias Moosa Guardavalle, the Chairman of Silk Road International Bank Board of Directors and the Finance Minister of the Ministry of Finance of Djibouti.
He said, China was one of the major investment countries of Djibouti and the trade contacts between them were frequent. The establishment of the Silk Road International Bank will help Djibouti improve the financial infrastructures, improve the clearing and settlement facilitation of both parties and effectively promote the local social economic development. Meanwhile, the advanced information technology, mature business model and mature market means brought by the Silk Road Bank will help Djibouti transfer the geographic advantages into the momentum of economic development and promote the realization of "Be the Financial Center of the East Africa".
"The Silk Road International Bank will adopt the advanced information technology and financial management experience to create the first high-tech bank of Djibouti with the modern information system. It will provide a package of financial solutions for China-Africa bilateral trade and the investment of China in Africa, provide safe and convenient payment and settlement service for numerous Chinese enterprises in Africa and escort the trades of Chinese enterprises in Africa," said Luo Feng. Djibouti will form the liquidation ring of the African region by taking the Silk Road International Bank as the carrier to provide the international clearing and settlement service for the global trade and consumption as well as to lay the foundation for establishing an international financial center.
"Belt and Road Initiative enables the China's high quality productions 'Going-out' and objectively, China-invested enterprises need the settlement center like Silk Road International Bank as well as convenient and efficient cross-border financial services," said Chen Chunying, one shareholder of the Silk Road International Bank and the Vice-President of Silk Road E-merchants Information Technology Co., Ltd. The Silk Road International Bank is an important link of the "Silk Road Station" in Belt and Road construction. Silk Road E-merchants need such a link, so do Chinese enterprises.
Who will be the next "Silk Road Bank"
Under the framework of WTO, any two countries can realize the point-to-point trade pattern. However, the pattern of monetary settlement is a single-polarization and the flattening of the trade and the single-polarization of the settlement not only limit the global growth, but also bring fatal effects to the geo-economics. One of the performances is the constant depreciation of the domestic currency and the enormous risks caused thereby.
"As the statistic shows, one well-known domestic enterprise in the Central Asia lost about USD 1.8 billion for currency devaluation last year" said Luo Feng. 10 years ago, we may not need the internationalization of RMB nor needed to concern about the exchange rate changes of other countries. But now, when we make the investment, what we take is RMB or US dollars and what we take back is the local currency. But many countries along the Belt and Road do not have US dollars, which may cause a big risk of depreciation.
As far as Luo Feng concerned, the new system of clearing and settlement established by the Silk Road International Bank through the big data and the block chain structure changes the past tree structure of dollar-based system into the net structure, which can realize the real-time account arrival and reduce the financial risks; what's more, under the new clearing system, all the money can become the clearing currency, which not only provides services for Chinese enterprises, but also is welcomed by European enterprises. The philosophy of "Co-consulting, Co-construction and Sharing" advocated by Belt and Road Initiative is truly reflected.
Luo Feng said frankly, African could not afford to install the fixed-line telephones and it evolved into the 3G era across the 2G era directly, realizing "out of nothing" and "corner overtaking". "It is also true for the financial infrastructures: presently, we really have the chance to enable the African finance to make the breakthrough from 'zero to one' like the communication industry through the new technologies such as the big data and the digital bank.
Luo Feng revealed that apart from the Silk Road International Bank in Djibouti, setting up a new silk road bank in Togo (Community of West African States) and a two-wing development pattern of "Togo in the west and Djibouti in the east" finally are being considered.
Presently, IZP Group has obtained the interbank clearing license in more than 40 countries of Europe, Central Asia, Africa, South Asia, Middle East, North Africa, etc. It is expected that it will enter into more than 120 overseas countries and regions in the next 3 years. The establishment of the Djibouti Silk Road International Bank is an important link of its global layout and will be the bridgehead for it to develop business in Africa.