SINGAPORE - Funding of up to 25 billion yuan ($5.11 billion) for banks in Singapore was announced in a new initiative by the Monetary Authority of Singapore (MAS) on Monday (Nov 23).
The scheme enhances yuan liquidity and supports banks' abilities to meet their customers growing business needs in the currency for Singapore and the region, said MAS in a statement.
Yuan funding of up to three months will be channelled to primary dealers - banks in Singapore approved by the MAS - through the authority's money market operations.
These funds will strengthen their credit intermediation capabilities and the overall yuan market liquidity in Singapore.
To support the development of the offshore yuan market in Singapore, the authority previously established the MAS Overnight RMB Liquidity Facility along with the MAS RMB Facility.
Banks could access these backstop facilities to obtain overnight and term RMB liquidity respectively, when needed to facilitate settlement needs and financing of cross-border trade or investment.
Following the introduction of the new initiative, the MAS Overnight RMB Liquidity Facility, which had a size of five billion yuan, will be discontinued from Monday.
The MAS RMB Facility remains in operation.
Market participants indicated that longer tenors and larger amount of yuan funding by the new initiative was better than the MAS Overnight RMB Liquidity facility, said MAS.