China signed off on an agreement in Beijing on May 14 with 26 countries to improve policy coordination and jointly address the pressing challenges of a financing gap for projects under the Belt and Road Initiative.

The agreement — known as the Financing Guidelines for the Belt and Road Initiative — aims to create a long-term and stable financing mechanism to break a “funding bottleneck” for the development of the initiative, said Finance Minister Xiao Jie.

“The financing bottleneck is a key challenge for the development of the Belt and Road Initiative,” Xiao said in a speech at the Belt and Road Forum for International Cooperation.

“Over the long term, financing for the initiative needs the joint efforts of countries and regions,” Xiao said.

“We need to develop a long-term, stable and sustainable financing system with diversified sources and proper risk management,” he added.

The new guidelines are also aimed at broadening financing channels by encouraging the participation of private capital and investors, while pushing innovation and strengthening regulatory cooperation among governments, according to the Ministry of Finance.

The ministry also signed a memorandum of understanding on May 14 with six multilateral development financial institutions－including the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank－to strengthen financing coordination for the Belt and Road Initiative.

Also on May 14, the governor of China’s central bank, Zhou Xiaochuan, called for a market-oriented approach to ensure sustainable funding for projects.

He said Chinese commercial banks needed to push the expansion of their networks in countries and regions connected to the initiative.

Chinese banks, led by Industrial and Commercial Bank of China, are already in discussions with multiple foreign banks and international financial institutions on forming a long-standing mechanism for the financing of projects under the initiative.

Zhou also called on using the currency of one country for the development of the Belt and Road Initiative to help reduce foreign exchange risks and maintain financial stability.

Meanwhile, World Bank President Jim Yong Kim said his organization was committed to bringing capital to the table, to meet the huge financing demand for infrastructure development in the countries participating in the program.

Kim said that the World Bank could help provide funding and bring in other sources of capital through innovative tools to help address the financing challenges that come with a limited infrastructure budget.