The Week That Was in Europe The Return of the State in International Lending, with Christoph Trebesch (Kiel Institute)
Jun 21, 2024
Christoph Trebesch from the Kiel Institute discusses the resurgence of state-based international lending, focusing on Ukraine's support, China's global role, and central bank swap lines post-financial crises. He delves into China's emergence as a major lender, challenges in tracking loans, and its strategic approach in global finance.
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State Lending and Global Power
- The biggest state-based international lenders are often the dominant global powers.
- This pattern has held true for 200 years, from Britain to the US to now China.
Dual Nature of State Lending
- State-based lending's role shifts between complementing and substituting private lending.
- It complements during peacetime by adding investments and substitutes during crises by replacing fleeing private capital.
China's Lending Boom and Bust
- Over half of China's outstanding international loans have faced financial distress in the past decade.
- This mirrors a typical lending boom and bust cycle.