SINGAPORE - A yuan clearing bank in Singapore will see the range of yuan-denominated product offerings increase, said Monetary Authority of Singapore (MAS) managing director Ravi Menon on Tuesday.
He was speaking at the Shangri-La Hotel at the inauguration of Industrial and Commercial Bank of China (ICBC) Singapore as a yuan clearing bank on Tuesday.
Mr Menon said the yuan clearing bank will be an important channel for yuan circulating between Singapore and China.
Singapore's deep and liquid capital markets will be able to support the region's renminbi financing needs, he added.
He said: "We have already seen companies here issuing (yuan)-denominated bonds. There will also be strong and growing demand for (yuan) trade services. There is a critical mass of international trading companies based in Singapore that will demand such services."
China's central bank, the People's Bank of China, authorised ICBC Singapore as a yuan-clearing bank in February. It is the first yuan-clearing bank outside of Greater China, which ICBC chairman Jiang Jianqing said is a significant step in the internationalisation of the Chinese yuan.
Speaking in Mandarin, he said Singapore's role as an international financial centre and Asia's second-largest forex centre, coupled with its geographical and cultural proximity to ASEAN, will mean a competitive advantage.
He added: "In the past few years, trade settlements in yuan for ICBC have reached 2.7 trillion yuan annually, and this volume has been sustained year on year.
"Singapore is well positioned to capture the potential trade settlement between China and South-east Asia." He noted that ASEAN is China's third-largest trade partner after the United States and Europe.
On Tuesday, the MAS signed a memorandum of understanding with the People's Bank of China on yuan business cooperation, where the two central banks agreed to cooperate closely in reviewing the conduct of yuan businesses and clearing arrangements in Singapore.
Regular dialogues to review yuan liquidity conditions and discuss issues concerning the stability of the yuan market will also be set up.