Singapore and China have agreed on new initiatives to strengthen cooperation on financial sector development and regulation.
These moves will further promote the international use of the Chinese yuan through Singapore, the Monetary Authority of Singapore (MAS) said in a statement on Tuesday.
For example, China will extend its Renminbi Qualified Foreign Institutional Investor (RQFII) programme to Singapore, with an aggregate quota of 50 billion yuan (S$10.2 billion).
This will allow qualified Singapore-based institutional investors to channel offshore yuan from Singapore into China's securities markets.
RQFII licence holders may also issue yuan investment products to the broad pool of investors in Singapore, using the RQFII quota.
The RQFII programme will help to diversify the base of investors in China's capital markets and promote adoption of the yuan for investment.
Furthermore, Singapore will be given consideration as one of the investment destinations under the new Renminbi Qualified Domestic Institutional Investor (RQDII) scheme. This will allow qualified Chinese institutional investors to use yuan to invest in Singapore's capital markets.
The measure will help to broaden the universe of assets available to Chinese investors as well as the investor base for Singapore's capital markets.
China and Singapore will also introduce direct currency trading between the Chinese yuan and Singapore dollar.
On the regulatory front, relevant agencies from both sides are in discussions to facilitate China-incorporated companies which have received regulatory approval to list directly in Singapore, instead of through entities incorporated outside China.
The Singapore Exchange and Shanghai Futures Exchange have also signed an agreement to strengthen collaboration in the joint development of commodity derivatives.
Singapore and China have furthermore agreed to strengthen cooperation in banking regulatory issues, through exchanges and dialogues on topics of shared interest, and enhanced coordination on international regulatory issues.