PBoC and MAS extend $46bn swap line

The People’s Bank of China (PBoC) and the Monetary Authority of Singapore (MAS) have extended a mutual swap line to 2019.

The deal makes 300 billion yuan ($46.0 billion) available to Singapore-based financial institutions via the country’s central bank.

The renewal of the swap line, which was set up in 2010 and first extended in 2013, follows a string of initiatives between the PBoC and MAS announced during a state visit by Chinese president Xi Jinping in October.

Among other things, the countries agreed to expand two existing cross-border renminbi pilot schemes; the China-Singapore Suzhou Industrial Park and Sino-Singapore Tianjin Eco-City.

The deal lets Singaporean banks lend renminbi to Suzhou- and Tianjin-based corporates, which in turn are allowed repatriate proceeds raised from bonds issued in Singapore, thereby incentivising firms to tap the offshore hub for renminbi funding.

The swap line will help support such cross-border initiatives by ensuring sufficient liquidity can be accessed in times of stress, it was suggested.

“The [swap line] is a key pillar of co-operation between the PBoC and MAS to strengthen regional economic resilience and financial stability,” the Singaporean central bank said in a statement.

“It aims to enhance banks’ confidence in carrying out their business in the two markets, and enables both central banks to provide foreign currency liquidity to stabilise financial markets.”