China, S'pore set up bilateral currency swap
by admin , July 23, 2010, 1715hrs

SINGAPORE (July 23, 2010) - The People’s Bank of China (PBC) and the Monetary Authority of Singapore (MAS) today announced the establishment of a bilateral currency swap arrangement.

MAS said the move was aimed at promoting bilateral trade and direct investment for economic development of the two countries. The announcement was made at the 7th Joint Council for Bilateral Cooperation (JCBC) Meeting between China and Singapore held in Beijing.

According to MAS, the bilateral currency swap arrangement is a key pillar of co-operation between the PBC and the MAS to strengthen regional economic resilience and financial stability.

The bilateral currency swap arrangement will provide Chinese Yuan liquidity of up to RMB150 billion and Singapore dollar liquidity of up to S$30 bn. The arrangement will be effective for three years and can be extended by mutual agreement.

CIMB-GK economist Song Seng Wun told AFP the agreement reflected the strong financial relations between the two economies, which will be among the world's fastest growing this year.

"If there is a crisis of confidence in each other's currency, the other can come in to help," Mr Song added, but he pointed out that the chances of that happening were low.

The deal would also "facilitate the internationalisation of the Chinese yuan," MAS said. The agreement "would not only strengthen Singapore's economic and investment linkages with China but also help to maintain our role as an international financial centre," MAS added.