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Boost for Singapore-Chongqing yuan cross-border flows

THE People's Bank of China Chongqing Operations Office (PBC Chongqing) on Friday announced that it will allow eligible corporates and individuals in the Chinese city to conduct cross-border yuan transactions with financial institutions and corporates in Singapore.

The directive was welcomed by Singapore's Monetary Authority of Singapore (MAS), which noted that the initiative will facilitate the greater use of yuan in the region and contribute to the growth of the offshore yuan market in Singapore.

"It will also strengthen financial connectivity between Chongqing and Singapore. This will be useful in achieving the objective of enhancing modern connectivity and services in China's western region under the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity, announced in November 2015," MAS added.

Among other things, PBC Chongqing's directive will allow corporates in Chongqing to issue yuan-denominated bonds in Singapore and repatriate the funds raised in full. In addition to Chongqing, the funds raised can be used outside the municipality for the development of economic activities and infrastructure in China's western region. This includes six provinces (comprising Gansu, Guizhou, Qinghai, Shaanxi, Sichuan and Yunnan), five autonomous regions (Guangxi, Inner Mongolia, Ningxia, Tibet and Xinjiang) and the municipality of Chongqing.

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Moreover, the directive will allow equity investment funds in Chongqing to make direct investments outside China, including Singapore and the Asean region in addition to allowing individuals in Chongqing to make yuan remittances to Singapore to settle current account transactions.

PBC Chongqing's directive issued today implements one of the agreed outcomes in financial cooperation between China and Singapore during Chinese President Xi Jinping's state visit to Singapore last November.