China and Singapore will introduce direct currency trading between the Chinese yuan and Singapore dollar, details of which will be announced separately, as per a statement on the Monetary Authority of Singapore’s website.
As a measure to internationalise RMB, China will extend its Renminbi Qualified Foreign Institutional Investor (RQFII) programme to Singapore, with an aggregate quota of RMB 50bn. 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. The RQFII programme will help to diversify the base of investors in China’s capital markets and promote adoption of the RMB for investment.
“Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come,” said MAS managing director Ravi Menon.
Singapore will also 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.
New measures are also being studied to allow cross-border flows of RMB between Singapore and China’ Suzhou Industrial Park as well as Tianjin Eco-City, the statement said.
Regulatory cooperation
Furthermore, Singapore and China announced measures to strengthen regulatory cooperation such as facilitating China-incorporated companies that have received regulatory approval to list directly in Singapore, instead of through entities incorporated outside China.
The Singapore Exchange and Shanghai Futures Exchange have signed a memorandum of understanding to strengthen collaboration in the joint development of commodity derivatives.
The two countries also agreed to strengthen cooperation in banking regulatory issues.
The agreement was reached at the 10th Joint Council for Bilateral Cooperation co-chaired by Singapore deputy prime minister, coordinating minister for national security, and minister for home affairs, Teo Chee Hean, and People’s Republic of China vice premier of the State Council, Zhang Gaoli.
