BEIJING (REUTERS) - China has named Industrial and Commercial Bank of China (ICBC) , the world's biggest bank, as the clearing bank for offshore yuan business in Singapore.
"Based on the arrangement between the People's Bank of China (PBOC) and the Monetary Authority of Singapore to strengthen cooperation in financial services, the PBOC has decided to authorise ICBC's Singapore Branch as the clearing bank of renminbi business in Singapore," the central bank said in a statement on Friday on its website, www.pbc.gov.cn.
Singapore issued full banking licenses to ICBC and Bank of China in October, moving closer to getting a yuan clearing bank that will let it compete more aggressively with other global financial centres in the growing market for yuan-denominated trades and financial products.
"This may pave the way for the start of an offshore deliverable market (in Singapore) similar to the ones in Hong Kong and Taiwan," Mr Dariusz Kowalczyk, senior economist and strategist for non-Japan Asia at Credit Agricole CIB in Hong Kong, said after the PBOC announcement on Friday.
Taiwan joined Hong Kong and London as an offshore yuan trading centre on Wednesday, a further step in Beijing's march to boost the currency's global reach and promote deeper economic integration with its one-time political foe.
That followed the signing of a clearing settlement agreement in January between China's central bank and Bank of China's Taipei branch - the yuan clearing bank for Taiwan.
The competition to become a major centre for offshore yuan transactions has intensified over the past year as China shows an increasing willingness to loosen capital controls and promotes the use of its currency for trade settlement.
Singapore and other global financial centres like London are seeking to capitalise on the rapid growth of the off-shore yuan bond market, which is dominated by Hong Kong.
Singapore is the world's fourth-largest forex trading centre and the main Asian base for oil and commodity traders.
China's state-run Xinhua news agency said in June 2012 that the island state has around 60 billion yuan (S$12 billion) in yuan deposits.
Yuan deposits in Hong Kong increased to 603 billion yuan in December, up 5.6 per cent from a month earlier, data from the Hong Kong Monetary Authority showed.