Singapore has the financial infrastructure to become the next overseas trading centre for the Chinese yuan, after Hong Kong.

More than 3,000 mainland firms already operate in Singapore, many involved in trading commodities that China imports.

China began allowing its currency to be used to settle international trades in 2009 through a scheme involving several Chinese cities along with Hong Kong, Macau and various Southeast Asian countries including Singapore. The scheme was extended to the rest of the world in 2010.

China has also been supportive of Singapore, signing in July 2010 a S$30 billion currency swap agreement with MAS to ensure yuan liquidity in the city-state. Chinese banks have also been expanding their operations in Singapore.

CITIC Bank International, the offshore arm of China’s CITIC Bank, recently opened a branch in Singapore to provide customers with yuan deposits and trade settlement involving the Chinese currency.

Author’s Comments:

This bodes well for traders buying goods from China, who now has to transact in USD terms. This would simplify the who process and possibly carry less currency risks as the RMB continues its gradual increase vs the USD.

Perhaps in time to come banks may even offer RMB loan facilities.

Another point is that with more yuan players, rates can become more competitive, unlike what is happening now, with RMB deposits giving a pathetic 0.68% vs the actual rates offered in China or Hong Kong: http://rmb.deposits.org/

With more banks setting up operations here, it also helps in the employ-ability of bankers. If you are looking at a career transition into banking relationship manager, priority banker, ultimately to private banker, you can also consider a move first into an insurance company, financial advisory firm as adviser. I’m told by reliable sources, with that experience it’s easier to move into a bank. Around 2 years experience to personal banking, around 3-4 years to get into priority banking.

As for Private Banking, it’s very hard, unless you have the contacts (through your wealthy family) or you already have a client base that is high net worth.

The yuan centre also makes it a top selling point, when selling Singapore to overseas Chinese.

Update (22 Apr 2011):

Since the signing of a S$30 billion currency swap agreement between China and Singapore to ensure yuan liquidity, in July 2010, there has been a bustling of activity. Top China banks , like China Construction Bank (CCB), are now vying to run the first yuan clearing house in Singapore. Other banks include: Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC).

All three banks are also expanding their services here intend to target SME’s on the need for yuan-denominated transactions.

Author’s Comments:

What could this mean for the Singapore Dollar or the economy?

For one, to have a swap agreement means that in a way, the Singapore dollar will gradually maintain a less volatile exchange rate with the RMB, so that traders and businesses do not have to be overly concerned with the wild fluctuations. Currently, however, the CNY is still depreciating against the Sing Dollar as it is largely still pegged to the USD.

With more China bank activities however, that is a boon to the bankers.

Original Article: 16 Mar 2011, Asiaone: S’pore ‘could be offshore yuan centre’

Original Article: 22 Apr 2011, Straits Times: Race is on for big yuan prize



[[T_F]]Data Leak Prevention – Data Security Solutions – Information Theft Protection, Detection and Prevention Software Productstracefusion_signature=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[[T_F]]