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Singapore Vies For Greater Offshore RMB Market Share

by Mary Swire, Lowtax.net, Hong Kong
17 June, 2014

The Monetary Authority of Singapore (MAS) has welcomed two initiatives that should further promote the international use of the Renminbi (RMB) and facilitate the growth of the RMB offshore market in Singapore.

MAS has announced that a facility, for providing liquidity of up to RMB5bn (USD800m) in overnight funds on any given day to financial institutions in Singapore, will be launched on July 1, 2014. It is aimed at assuring financial institutions that their short-term RMB funding needs will be met, and will complement the existing MAS RMB facility, which allows banks to borrow RMB funds for trade, direct investment, and market stability purposes.

MAS Deputy Managing Director Jacqueline Loh said: "As the volume of RMB activities grows in Singapore, the overnight RMB liquidity facility will help alleviate end-of-day funding strains of financial institutions. This will provide a conducive environment for the continued expansion of RMB activities in Singapore."

MAS has also welcomed a directive issued today by the People's Bank of China (PBC) Nanjing branch that will allow eligible corporates and individuals in China's Suzhou Industrial Park (SIP) to conduct cross-border RMB transactions with Singapore.

The SIP cross-border RMB initiative was part of the agreement reached at the 10th Joint Council for Bilateral Cooperation in October last year to strengthen China-Singapore financial cooperation. PBC's directive will allow for a range of cross-border transactions, including banks in Singapore conducting cross-border RMB lending to corporates in the SIP, and corporates in the SIP issuing RMB bonds in Singapore.

In addition, equity investment funds in the SIP will be able to conduct direct investment in corporates in Singapore, while individuals in the SIP will be able to conduct RMB remittance between China and Singapore for the settlement of current account transactions and direct investment in corporates in Singapore.

Loh added that: "The introduction of cross-border RMB channels between Singapore and the SIP will facilitate greater financing for companies operating in the SIP, encourage direct investment in corporates in Singapore, and broaden the range of RMB activities that can be conducted out of Singapore. We look forward to similar arrangements being put in place in the near future to allow cross-border RMB transactions between Singapore and Tianjin Eco-City."

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