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MAS unveils new measures to promote offshore RMB

The Monetary Authority of Singapore will provide an overnight RMB liquidity facility to financial institutions from July 1. The move will facilitate growth of the offshore RMB offshore market in Singapore.

SINGAPORE: The Monetary Authority of Singapore (MAS) will introduce a facility to provide up to 5 billion renminbi (RMB) in overnight liquidity to financial institutions in Singapore as part of measures to boost the city-state's fast-growing offshore RMB market.

The overnight facility -- which will be launched on July 1 -- will give financial institutions the assurance that their short-term RMB funding needs will be met, MAS said in a statement on Friday.

The new facility will complement an existing facility that allows banks to borrow the Chinese currency on a term basis for trade, direct investment and market stability purposes.

MAS' announcement coincided with an directive issued by the People's Bank of China (PBC) Nanjing branch that said eligible corporates and individuals in the Suzhou Industrial Park (SIP) will be allowed to conduct cross-border RMB transactions with Singapore.

This means banks in Singapore will be allowed to lend RMB to corporates in the Suzhou park. Firms there can issue RMB-denominated bonds in Singapore, while equity investment funds in the SIP can directly invest in Singapore-based corporates.

"The introduction of cross-border RMB channels between Singapore and 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," said MAS Deputy Managing Director Jacqueline Loh.

"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," she added.

Singapore is the second largest offshore clearing centre for transactions involving the RMB, which is being used increasingly for trade and investments as China liberalises the use of its currency.

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