"With more liquidity, financial institutions will offer a wider range of RMB products and services to better meet the financing, investment and risk management needs of the market," commented Ravi Menon, Managing Director of Singapore's Monetary Authority.
Several other countries, including London and Australia, have also sought entrance into the RMB currency market following Singapore's approval as an offshore clearinghouse for the Chinese Yuan.
As a result of these trends, Mr Menon further added that "as use of the RMB expands over time in the region and beyond, there will be room for more than one offshore RMB center. Each center will have its own niche and strength."
Singapore's growing interest in the RMB has spurred other regional banks to offer similar RMB products and services to their clients. As such, HSBC, Standard Charter, United Overseas Bank and DBS Bank have all started issuing Yuan-denominated bonds in the country. As of now, they have raised a combined RMB 2.5 billion (US$407 million).
Furthermore, according to a report released by DBS Bank, the market for offshore Yuan-denominated bonds is expected to reach RMB 1 billion (US$163 billion) by 2015.
Singapore is home to roughly 4,000 Chinese companies conducting business throughout Southeast Asia. However, despite a fairly large Chinese commercial presence in the country, a study published by HSBC notes that only 11 percent of all Singapore-based businesses actually use RMB to settle their trade with Chinese companies. That number is expected to grow to 30 percent within the next five years.
The RMB has also received attention from investors and speculators that hope to profit from holding the Chinese currency. The RMB appreciated 1.07 percent in 2012, and has since risen 1.7 percent throughout the first two quarters of 2013.
