On Friday, the Monetary Authority of Singapore (MAS) announced more initiatives to promote Singapore as an offshore yuan hub. It will launch on July 1 a new facility to provide overnight yuan liquidity to financial institutions in Singapore.
Meanwhile, the Nanjing branch of the People's Bank of China (PBOC) will start allowing eligible companies or individuals in the Suzhou Industrial Park to carry out cross-border yuan transactions with Singapore.
These are just the latest developments in the rapid growth of the offshore yuan market in Singapore. We trace the timeline of Singapore's journey towards becoming a top destination for offshore yuan transactions:
Feb 8, 2013: People's Bank of China (PBOC) appoints ICBC's Singapore branch as the yuan clearing bank in Singapore.
Apr 2, 2013: PBOC and the MAS sign a Memorandum of Understanding (MOU) to cooperate more closely in reviewing the conduct of yuan businesses and clearing arrangements in Singapore, yuan liquidity conditions and stability of the yuan market.
May 27, 2013: ICBC kicks off yuan clearing services in Singapore.
On the same day, HSBC and Standard Chartered separately announce Singapore's first dim sum bonds: offshore yuan bonds to raise 500 million yuan and 1 billion yuan, respectively.
The Singapore Exchange also launches its depository services for yuan-denominated bonds.
Oct 23, 2013: Singapore and China announce new initiatives to strengthen cooperation on financial sector development and regulation.
China will extend its Renminbi Qualified Foreign Institutional Investor (RQFII) programme to Singapore, with an aggregate quota of 50 billion yuan. This will let Singapore-based institutional investors channel offshore yuan from Singapore into China markets.
Chinese investors will also be allowed to use yuan to invest in Singapore's capital markets.
Dec 3, 2013: Hong Kong Exchanges & Clearing and Singapore Exchange agree to work together on areas such as new technology, products and regulatory matters to promote the yuan's internationalisation.
Mar 13, 2014: MAS says it will develop a real-time gross settlement system for the yuan, putting Singapore on par with offshore centres like Hong Kong and Taiwan.
Apr 28, 2014: Singapore is ranked as the world's top offshore clearing centre for the yuan outside of China and Hong Kong, staying ahead of London for the second straight month.
June 13, 2014: MAS announces the upcoming launch of a new facility that will provide up to 5 billion yuan in overnight funds on any given day. This is aimed at assuring financial institutions that their short-term yuan funding needs will be met.
PBOC's Nanjing branch also issues a directive that will allow for a range of cross-border yuan transactions in the Suzhou Industrial Park, including letting Singapore banks lend yuan to companies in the industrial park and letting companies in the industrial park issue yuan bonds in Singapore.