Development finance needs more than one currency
The renminbi is an increasingly attractive currency in which to denominate new borrowing
THE global development-finance gap remains large, and developing countries need more options. United Nations Trade and Development has noted that developing countries face an annual shortfall of US$4 trillion in achieving the Sustainable Development Goals.
Yet, for much of the postwar era, development finance has been predominantly denominated in US dollars. This leaves them exposed to changes in borrowing costs and debt burdens driven by US monetary policy and investor appetite in advanced economies.
Fortunately, efforts to diversify the currency of borrowing, including towards local currencies, have received renewed attention since early 2025. Recent changes in US economic policies and institutions have underscored the risks of relying on a single funding currency.
