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SINGAPORE – On Monday (November 23) the Monetary Authority of Singapore (MAS) announced financing of up to 25 billion yuan ($ 5.11 billion) for Singapore banks in a new initiative.
The scheme improves the liquidity of the yuan and supports the ability of banks to meet the growing trading needs of their clients in the currency of Singapore and the region, MAS said in a statement.
Financing in yuan for up to three months will be channeled to primary distributors (MAS-approved banks in Singapore) through the authority’s money market operations.
These funds will strengthen its credit intermediation capabilities and the overall liquidity of the yuan market in Singapore.
To support the development of the offshore yuan market in Singapore, the authority previously established the MAS Overnight RMB Liquidity Facility together with the MAS RMB Facility.
Banks would be able to access these backup services to obtain liquidity in RMB for one day and for a term, respectively, when needed to facilitate cross-border trade or investment financing and settlement needs.
Following the introduction of the new initiative, the RMB MAS overnight liquidity facility, which was 5 billion yuan in size, will be discontinued from Monday.
The MAS RMB facility continues to operate.
Market participants indicated that the longer terms and larger amount of yuan funds from the new initiative were better than the MAS Overnight RMB Liquidity line, MAS said.
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