As part of China and Singapore’s enhanced financial services cooperation under the China-Singapore Free Trade Agreement, the People’s Bank of China (PBC) appointed the ICBC Singapore branch as the Renminbi (RMB) clearing bank in Singapore on 8 February 2013.
On 2 April 2013, PBC and MAS signed a Memorandum of Understanding (MOU) on RMB Business Cooperation, marking closer cooperation between PBC and MAS in reviewing the conduct of RMB businesses and clearing arrangements in Singapore, RMB liquidity conditions and stability of the RMB market. PBC and ICBC Singapore branch also signed an RMB clearing agreement to formalise the clearing arrangements, allowing ICBC Singapore branch to provide RMB clearing services to participating banks and their customers.
The appointment of an RMB clearing bank in Singapore brings important new RMB capabilities to the Singapore financial system, providing financial institutions in Singapore and the region with the opportunity to play a greater role in intermediating the growing trade and investment flows between China and the rest of the world. With the build-up of RMB liquidity in Singapore, a wider range of RMB products and services will be offered by financial institutions in Singapore to better meet the financing, investment and risk management needs of the market.
Renminbi Qualified Foreign Institutional Investor (RQFII) programme
Singapore and China agreed on 23 Oct 2013, 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.
(i) 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. RQFII licence holders may also issue RMB investment products to the broad pool of investors in Singapore, using the RQFII quota. The RQFII programme will help to diversify the base of investors in China’s capital markets and promote adoption of the RMB for investment.
(ii) 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.
(iii) China and Singapore will introduce direct currency trading between the Chinese Yuan and Singapore Dollar. Further details will be announced separately.
(iv) 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).
For details relating to the RQFII application process, please refer to the Renminbi Qualified Foreign Institutional Investor (RQFII) FAQ.
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