The use of the Chinese yuan has soared in Singapore over the past year but there is still much to be done to promote its use across the region, a Monetary Authority of Singapore (MAS) official said yesterday.
Leong Sing Chiong, the assistant managing director of the Singapore central bank’s development and international group, told a conference that the launch of yuan clearing services last May by Chinese bank ICBC Singapore sparked a boom in the currency as a financial instrument.
“Given Singapore’s role as a hub for multinational corporations, many of whom maintain regional treasury centres here, we are seeing strong [yuan] deposit growth fuelled by such regional treasury centres,” Leong said.
“This gained traction particularly after the People’s Bank of China relaxed rules in July last year to allow corporates operating in China to channel surplus yuan offshore for centralised cash management,” he said.
Total yuan deposits in Singapore stood at 200 billion yuan (Bt1.05 trillion) as of the end of December, up 70 per cent from nine months before.
Yuan-denominated loans, mainly trade financing, grew by almost 25 per cent in the same period to exceed 300 billion yuan.
That gave Singapore about 60 per cent of global yuan trade finance outside mainland China and Hong Kong.
There have also been six issuances of yuan-denominated bonds in Singapore totalling 7.5 billion yuan since the market was launched.
While these developments indicate strong growth, Singapore was starting from a low base and much work lies ahead, Leong noted.
“Singapore has consistently [striven] to ensure that our financial centre is able to offer a full suite of financial products and services, and this must include the [yuan].
“For us, this is not about an all-out race to be the dominant [yuan] financial centre, nor is it about one-upmanship viz-a-viz other competitors.”
Rather, he added, this is about demonstrating relevance and showing how Singapore as a financial centre can add value to the growth of the yuan as an international currency.
Leong said Singapore would promote the use of the currency across the region, which included helping meet the needs of individuals, corporates and investors for yuan, and working with other financial centres to develop the offshore yuan market.
Over time, the MAS expects to see a broader range of yuan products catering to regional and international investors, he added.