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A CBR “involves one financial institution (the correspondent) providing banking services to another financial institution (the respondent), where both institutions are based in different countries,” said AUSTRAC.
“Under this arrangement, correspondent banks may provide the respondent bank a wide range of services, including but not limited to: cash management (e.g. interest-bearing accounts in a variety of currencies), international wire transfers, cheque clearing, payable-through accounts and foreign exchange services,” it said.
Treasurer Jim Chalmers addressed the Pacific Banking Forum, driving home how important CBR investment is for the region: “Today we are here today to talk about banking. There couldn’t be a more important time. The challenges in front of us are clear and confronting.
“We know the Pacific has seen the fastest withdrawal of correspondent banking services of any region in the world. We know these vital services help communities to access foreign currencies and international payment systems. And we also know that without them, large parts of the Pacific risk being cut off from the global financial system.
“At stake here is the ability of the Pacific to engage with the world. To attract investment. To grow your economies. And for loved ones and family members to receive money from family and friends overseas.”
The initiative will see a $6.3 million investment into banking infrastructure in the Pacific, going to the World Bank and Asian Development Bank to develop digital identity infrastructure and improve compliance with regulations. Now, a roadmap has been released, detailing the 24-month plan for the region.
“We’re all here today because we refuse to let the decline in banking services in the Pacific continue. Ensuring all Pacific countries have access to safe, secure and stable banking is one of Australia’s highest priorities in the region. You can bank on Australia to work with you to keep the Pacific connected to the global financial system,” said Chalmers.
“Today, I want to focus on the solutions, steps we are already taking, and new measures I’m announcing, to strengthen our response. The key to any lasting solution to the decline of services is rebuilding robust financial markets infrastructure across all Pacific nations. And so that’s what we’re targeting.”
Chalmers outlined the goals and strategies of the plan: “Our goals here are clear: We want to arrest and reverse the decline in services, alleviate the immediate pressure on local financial systems and attract new private capital into Pacific markets. Our strategy is to build more resilient banking infrastructure, bolster its integrity and boost private sector investment. And our message here today is you can bank on Australia to stand with you and face this pressing challenge in the Pacific.
“We’ve already made substantial progress via the multi‑year Pacific Partnership. Working with New Zealand and the International Finance Corporation. We’ve helped roll out national payments systems infrastructure across Fiji, Papua New Guinea, Samoa, Solomon Islands and Vanuatu.
“This infrastructure means these countries now have access to electronic payment systems which allow commercial banks to connect with central banks and each other to make electronic transfers and Central Securities Depositories to settle and clear government bonds.”
Australia’s role in this initiative is expected to not only develop the digital economy of the Pacific nations, but allow for “cheaper remittance transfers to the Pacific and a safe and secure way to make digital payments that mean lower costs and faster services for governments, businesses and bank customers.”
Westpac and ANZ banks are also hopping on board to provide banking services to the Pacific Islands.
“We know how critical these services are for local communities, which is why we have been actively talking to all the major Australian banks, to let them know how important a continued Australian banking presence in the region is to the government,” said Chalmers.
“We value the contribution they make to the creation of strong and resilient banking sectors in Pacific countries and a peaceful, stable and prosperous region.
“We are one Pacific family and Australia takes its responsibilities as a member of that family seriously. We say to you all today: You can bank on Australia to stand with you, face these pressing challenges together and build a prosperous future together in the years ahead, for every country on the shores of the ocean we share.”
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