The Portuguese Antonio Costa administration dumps the U.S. dollar hegemony as an international reserve currency.
The Portuguese government, lead by socialist Prime Minister Antonio Costa, decided that Portugal will be the first Eurozone country to issue bond notes in Chinese currency after receiving authorization from the Asian country, Finance Minister Ricardo Mourinho Felix confirmed Wednesday.
Portugal, which already issues loans denominated in euros and dollars, will issue a three-year bond worth of RMB 2,000 million, appoximately US$290 million.
The Portuguese Yuan-denominated financial operation will begin next week and its average cost will be just 0.2 percent higher than a Euro debt issuance.
"Our goal is to be in a large, full of liquidity market and thus expand our investor base," Mourinho said and explained that the Chinese regulators' authorization paves the way for larger transactions in the future.
In May 2010, the Chinese government set rules aimed at allowing countries to issue this kind of debt titles. This financial opportunity has already been grasped by Poland in 2016 and the Philippines in 2018.
'The dollar’s dominance is increasingly seen as a problem in Brussels, as it limits the bloc’s room to achieve foreign policy objectives, while it also complicates the transmission of the ECB’s monetary policy across euro-area financial markets.' https://t.co/nFPUZbl3XZ pic.twitter.com/bfcQQXiSDC— Jesse Felder (@jessefelder) 20 de mayo de 2019
On March 20, Italy, the first Group of Seven major industrialized nation to join officially the New Silk Road project, also announced a Panda Bonds program to co-finance Italian companies which are working in the Asian country.
China is currently the largest non-European foreign investor in Portugal and has investments in sectors such as electricity, water, banks, insurance and health.
In the last visit to the Mediterranean country on Dec. 2018, Chinese President Xi Jinping signed an agreement with PM Costa to include Sines, Portugal's main port and industrial city, in the New Silk Route, a multinational project which seeks to join China to Europe.