SINGAPORE, Oct. 22 (Xinhua) -- China and Singapore agreed on Tuesday to extend the Renminbi Qualified Foreign Institutional Investor (RQFII) program to Singapore, with an aggregate quota of 50 billion yuan (8.2 billion U.S. dollars), their central banks announced here.
The pilot program is one of the initiatives agreed upon by the two countries at a meeting co-chaired by Chinese Vice Premeir Zhang Gaoli and Singapore's Deputy Prime Minister Teo Chee Hean.
The RQFII program "will allow qualified Singapore-based institutional investors to channel offshore RMB from Singapore into China's securities markets," the Monetary Authority of Singapore said.
China has been gradually loosening its capital controls to move towards a freely convertible yuan.
The Monetary Authority of Singapore said the RQFII license holders may also issue RMB investment products to investors in Singapore, using the RQFII quota.
In the opposite direction, the two sides also agreed to launch the pilot scheme of Renminbi Qualified Domestic Institutional Investor (RQDII) in Singapore "when it is the right time," the People's Bank of China said in a statement.
The scheme will allow qualified Chinese institutional investors to use RMB to invest in Singapore's capital markets.
Hu Xiaolian, deputy governor of the Chinese central bank, is a member of the Chinese delegation led by Vice Premier Zhang Gaoli to the 10th Joint Council for Bilateral Cooperation (JCBC) meeting in Singapore on Tuesday.
Financial services is one of the sectors where the two sides agreed to work together to boost their bilateral cooperation on Tuesday.
They also agreed to introduce direct currency trading between the Yuan and the Singapore Dollar, with further details expected to be announced separately.
The Suzhou Industrial Park and the Tianjin Eco-City, two flagship cooperation projects led by the Chinese and Singapore governments, will also play a role in China's push for RMB internationalization. China will offer support to the two parks to try out innovative ideas in the cross-border RMB operations.
The two sides will also strengthen their cooperation in the banking sector and its regulation, including boosting the coordination efforts in terms of international financial regulation.
The People's Bank of China said authorities of the two countries will also boost their cooperation and dialogues in the development and regulation of the futures and derivatives market.
Support will be given to the exchanges of the two countries to boost their cooperation. The two sides also agreed to establish mechanisms to facilitate the listing of Chinese enterprises in Singapore, it said.
The Monetary Authority said that the new initiatives build on agreements concluded earlier.
Singapore has been pursuing a role as one of the offshore RMB centers. The local units of the Bank of China and the Industrial and Commercial Bank of China have both been offering yuan-clearing services in Singapore. The RMB deposits in Singapore's banking system exceeded 140 billion yuan (23 billion U.S. dollars) at the end of July, according to the Monetary Authority.
"Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come," the Monetary Authority quoted its managing director Ravi Menon as saying on Tuesday.