Published Date: 13 March 2014

"Singapore's Perspectives on RMB Internationalisation" - Welcome Address by Mr Leong Sing Chiong, Assistant Managing Director, Monetary Authority of Singapore, at the Asia Securities Industry Financial Markets Association (ASIFMA) 4th Offshore Renminbi Markets Conference on 13 March 2014

Distinguished guests,
Ladies & gentlemen,
Good morning.

1.   Let me first thank ASIFMA for inviting me to speak at this Renminbi (RMB) Markets Conference.   This conference comes at a very timely juncture, given recent focus and attention on key China-related issues, including near-term growth prospects, pace and scope of structural reform, as well as RMB internationalisation.

2.   Today, I will focus my remarks on RMB internationalisation.  As some of you may know, this is a subject that is close to my heart, having been closely involved in discussions with the People’s Bank of China (PBC) over the last two years.  I will first review developments in the RMB market in Singapore, outline some plans for enhancing the market this year, then go on to share some thoughts on our RMB journey. 

Singapore’s RMB journey

3.   Singapore’s RMB journey started almost exactly a year ago. On the eve of last year’s Lunar New Year holidays, PBC announced that ICBC Singapore would be appointed as the RMB clearing bank for Singapore.  Following three months of intensive preparations, ICBC Singapore launched its RMB clearing services in May last year. 

4.   The commencement of RMB clearing arrangements in Singapore has clearly helped to catalyse the growth of RMB activities here. In fact, 2013 ended on a strong note for us:

  • As of end-December last year, our total RMB deposits stood at RMB 200 billion, a 70% increase over deposit levels in March last year. For the same period, RMB-denominated loans, mainly trade financing, grew by almost 25% to reach over RMB 300 billion.  To put this figure into perspective, based on SWIFT data, Singapore accounted for about 60% of RMB trade finance outside China and Hong Kong.
  • Since the launch of the RMB market in Singapore, we have seen six successful issuances of Lion City bonds totalling RMB 7.5 billion, including Bank of China Singapore’s recent RMB 3 billion issuance.  These Lion City bonds were very well subscribed, and saw strong demand among investors in Singapore, as well as the region.

5.   So, what do we make of this?  First, from the outset, MAS’ over-riding priority was to ensure the development of a stable and efficient RMB infrastructure that can support growing RMB volumes and activities over time.  The strong growth of RMB activities over the last nine months is testimony to the great efforts put in by ICBC Singapore and key participating banks, to build their RMB systems and capabilities to cater to the needs of their clients in Singapore and the region.

6.   Second, given Singapore’s role as a hub for multinational corporations, many of whom maintain regional treasury centres here, we are seeing strong RMB deposit growth fuelled by such regional treasury centres.  This gained traction particularly after the PBC relaxed rules in July last year to allow corporates operating in China to channel surplus RMB offshore for centralised cash management.  Third, on the trade-financing front, we have seen strong growth in the discounting of RMB letters of credit in Singapore. This reflects increasing acceptance by exporters to China, such as the international commodity traders based in Singapore and the region, to accept payments denominated in RMB.

7.   The interest that we are seeing in RMB today stands in stark contrast to the situation just 2-3 years back, where there was much less interest in or familiarity with RMB opportunities.  Nevertheless, we are starting from a low base, and much work lies ahead to build on the growth we have achieved last year. 

8.   What’s in store for 2014?  We see our work focusing on three broad fronts:   First, we will look to broaden and deepen the RMB ecosystem in Singapore.  While we are gaining strong traction in RMB trade financing activities, we want to promote greater activity in the areas of capital markets and asset management as well. In particular, since the allocation of RMB 50 billion RMB Qualified Foreign Institutional Investor (RQFII) quota to Singapore in October last year, we have seen keen interest from banks and asset management companies to apply for the quota.  Over time, we expect to see a broader range of RMB product offerings catering to the needs of regional and international investors.

9.   At the same time, the Singapore Exchange has just recently announced that it would further expand its current suite of foreign exchange (FX) futures to include RMB currency futures in the third quarter this year. The RMB futures will provide an additional instrument for investors to hedge their FX risks on a transparent and regulated platform.

10.  Second, we aim to facilitate cross border market access for Singapore-based financial institutions to meet the RMB financing and investment needs of corporates in the Suzhou Industrial Park (“SIP”) and Tianjin Eco-City (“TEC”).  This initiative complements the close economic linkages that Singapore has established with each of these zones, and reflects PBC’s commitment to have appropriate financing arrangements that support real economic activities.  We are hopeful that the implementation guidelines for such cross-border financing arrangements will be released by the middle of this year. 

11.  Third, in response to industry feedback, we will enhance the infrastructure of our RMB market by developing a RMB Real Time Gross Settlement (RTGS) System that will serve to strengthen the efficiency of the settlement of RMB payments in Singapore. The development of a RMB RTGS system in Singapore will instil confidence amongst financial institutions and market participants that the long-term growth of RMB volumes and activities in Singapore is supported by robust infrastructure. 

Some reflections on our RMB journey

12.  What are our views of the future?  The path forward is likely to be a complex and challenging one for China.  At today’s conference, many of you will be deliberating over some of the important issues that China will have to confront in plotting its path towards achieving long-term sustainable growth.

13.  However, recent policy pronouncements by various Chinese authorities indicate that the medium term direction of travel is clear.  With continued strong commitment towards promoting RMB internationalisation and achieving capital account convertibility, coupled with a strong push towards further deepening of its capital market, we are likely to see a greater degree of economic and financial integration between China and the rest of the world.  Within Asia, we believe that the growing role of the RMB is likely to transform the Asian financial landscape in the next 5-10 years.

14.  Even without full convertibility, the use of the RMB as a trade currency has soared in the last five years. As a payment currency, the RMB has leapfrogged from 20th position in 2012 to 7th in 20141.  RMB trade settlement as a proportion of China’s total trade has grown from 3% in 2010 to 16.5% in 2013. The increasing acceptance of the RMB as a trade settlement currency has in turn fuelled the growth of RMB FX trading.  The RMB is now the 9th most actively traded currency in the world, up from 17th position in 20102.

15.  MAS has taken the view that it is critical to build RMB capabilities early to prepare well for the future.   Singapore has consistently strived to ensure that our financial centre is able to offer a full suite of financial products and services, and this must include the RMB.  For us, this is not about an all-out race to be the dominant RMB financial centre, nor is it about one-upmanship viz-a-viz other competitors.  Rather, this is about demonstrating relevance, and showing how we can value-add as a financial centre, particularly in the following areas: 

  • First, in terms of how we can use our strengths as a financial centre to promote the use of RMB in Southeast Asia and the broader region, in a way that is consistent with PBC’s broader objectives.
  • Second, to ensure that our financial centre is able to meet the RMB needs of individuals, corporates and investors based in Singapore and the region, particularly given strengthening trade and investment flows between China and the rest of Asia. 
  • Third, in terms of how we work with other financial centres to promote RMB fungibility across markets, in a way that enhances overall liquidity and efficiency of the offshore RMB market.  To this end, Singapore and the UK have recently announced plans to boost RMB cooperation between our two financial centres.  Singapore and London have complementary strengths in the offshore RMB space and we will work together to deepen the marketplace and facilitate RMB liquidity flows between our centres.  Likewise, we will also look for opportunities to collaborate with other centres.


16.  Let me conclude. Singapore is only just starting out on our RMB journey.  Based on the growth that we have seen over the last few months, there is much to be excited about.  But much more work lies ahead, and we look forward to using our role as a regional trade and financial hub to promote greater use of the RMB throughout the region, working closely with PBC, industry players like yourselves, as well as other financial centres. 

17.  On this note, I wish all of you a fruitful and rewarding conference. Thank you.



1 SWIFT press release of 27 Feb 2014.
2 Source: Bank for International Settlements (“BIS”) report on foreign exchange turnover published in September 2013.