Singapore strengthens financial ties with China through new agreements

Promotion of RMB in Singapore enhanced.

Singapore and China today agreed on new initiatives to strengthen cooperation on financial sector development and regulation. The agreement was reached at the 10th

Joint Council for Bilateral Cooperation (JCBC), co-chaired by Singapore Deputy Prime Minister, Coordinating Minister for National Security, and Minister for Home Affairs, Mr Teo Chee Hean, and People’s Republic of China Vice Premier of the State Council, Mr Zhang Gaoli.

The new initiatives will further promote the international use of the Renminbi (RMB) through Singapore.

Among the new initiatives, China will extend its Renminbi Qualified Foreign Institutional Investor (RQFII) programme to Singapore, with an aggregate quota of RMB 50 billion.

This will allow qualified Singapore-based institutional investors to channel offshore RMB from Singapore into China’s securities markets.

Singapore will be given consideration as one of the investment destinations under the new Renminbi Qualified Domestic Institutional Investor (RQDII) scheme. This will allow qualified Chinese institutional investors to use RMB to invest in Singapore’s capital markets. The measure will help to broaden the universe of assets available to Chinese investors as well as the investor base for Singapore’s capital markets.

China and Singapore will introduce direct currency trading between the Chinese Yuan and Singapore Dollar. Further details will be announced separately.

New measures are being studied to allow cross-border flows of RMB between Singapore and Suzhou Industrial Park (SIP) as well as Tianjin Eco-City (TEC).

These new initiatives build on agreements concluded earlier this year, including the signing of the MOU on RMB Business Cooperation between the Monetary Authority of Singapore (MAS) and the People’s Bank of China (PBC), and the enhancement of the bilateral swap agreement between the two central banks, which paved the way for the launch of RMB clearing functions in Singapore in May this year.

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