China and Singapore agree to boost use of RMB
(14 October 2015 – Singapore) Earlier this week, China announced new initiatives to further promote the international use of the renminbi (RMB) through Singapore.
The current cross-border RMB initiatives will be expanded to the cities of Suzhou and Tianjin.
In a statement, the Monetary Authority of Singapore (MAS) said: “This means that banks in Singapore will be able to lend RMB to corporates across Suzhou and Tianjin, and corporates in Suzhou and Tianjin will be able to issue RMB bonds in Singapore,”
“This will give more financing options to Suzhou and Tianjin corporates as well as provide financial institutions and investors in Singapore additional avenues to deploy their growing RMB liquidity in Singapore.”
Corporates in Suzhou and Tianjin will now be permitted to repatriate 100 percent of the proceeds raised from bonds issued in Singapore. Corporates in Suzhou Industrial Park will also be allowed to borrow from Singapore-based banks.
The new initiative will be a boon for local banks say OCBC and UOB.
"This cross-border RMB initiative will be a boon for banks as we are able to support many more businesses that previously were unable to access offshore funding,” said Head of OCBC’s China Business Officer Benjamin Quek.
A spokesperson for UOB added: “This is a significant move because it will facilitate greater financial cooperation, trade and investment flows between China and Singapore,"
"It opens up more trade financing, cash management and capital market fundraising channels between the two markets. This is important to help increase the pace of RMB internationalisation."
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