Singapore and China have agreed to further strengthen financial cooperation through new initiatives in the offshore Renminbi (“RMB”) market, capital markets and insurance. The agreement was reached at the 11th Joint Council for Bilateral Cooperation (JCBC) meeting held in Suzhou and announced by the Monetary Authority of Singapore (the “MAS”) on 27 October 2014.
Offshore RMB market
Two initiatives agreed at the meeting will strengthen economic and financial linkages between Singapore and China, further promoting the international use of RMB for trade and investment:
- Direct currency trading between the Chinese Yuan and Singapore Dollar will commence from 28 October 2014. This helps lower foreign exchange transaction costs and encourage greater use of the two currencies in cross-border trade and investments.
- Singapore proposed to allow China-incorporated financial institutions to issue RMB-denominated debt instruments in Singapore directly. This will help to diversify long-term funding for Chinese financial institutions by allowing them to tap into the international institutional investor base in Singapore.
Cooperation in capital markets and insurance
Singapore and China also agreed to strengthen cooperation in the areas of capital markets and insurance. The regulatory authorities from the two countries will study measures to enhance collaboration between the derivatives markets of Singapore and China and explore collaborative initiatives in the area of catastrophe risk insurance.