In addition, PBC and MAS together announced an expanded Currency Swap Facility last Friday. This will see a doubling in the size of the swap facility from RMB150 to RMB300 billion. The scope of the Currency Swap Facility will also be expanded to allow MAS to provide RMB liquidity to banks in Singapore, where needed. This backstop facility will further strengthen confidence in Singapore’s offshore RMB market, and encourage more financial institutions, corporates, and investors to step forward and participate in the RMB market via Singapore. 36. Secondly, with a strong RMB pool, Singapore can provide enhanced access to RMB funding for corporates and investors. Singapore is a major source of FDI to China and serves as the Asia-Pacific headquarters for many multinational companies (MNCs) and Asian corporates with operations in China. We also serve as the regional treasury centre for a large base of Chinese corporates. 37. With the new RMB clearing arrangements, we can expect financial institutions based in Singapore to reach out to local and regional corporate and investors and encourage greater participation in the offshore RMB market. 38 Thirdly, Singapore can support the integration of offshore RMB with Asian local currency markets and act as a test-bed for new RMB products. The development of a wider range of RMB products will be healthy. It will create additional ways in which corporates can redeploy their RMB funds in the offshore markets, and provide additional products for investment. 39.
But it also means we have a long way yet to go in reducing debts and returning to sustainable growth. 5. We are also seeing important shifts in the structure of global finance, besides the gradual contraction in global liquidity. It is too early to say where we will be five years from now, but some of the broad brush-strokes in this new landscape of global finance are already with us and likely to stay: •  The return on equity in global banking has fallen, and will not return to pre-crisis levels, given stricter capital and liquidity rules. •  Deposits have become more important as a source of bank funding. •  Banks in certain major jurisdictions have retreated from global markets, and worryingly, and may stay in retreat for some time. •  The securitised debt markets should recover, but with less leverage underpinning them, and hopefully greater risk transparency. •  In the derivative markets, there will be greater standardisation of products, and much greater reliance on common market infrastructure – for trading, clearing and reporting of trades. High volume, low-margin platforms will likely gain in competitiveness. •  Wealth management will remain a growth industry, especially in Asia, where the pool of wealth is growing most rapidly and the need for diversification remains great. •  And outside of intermediated finance, companies will seek new ways of raising funds, including through private placements. 6. Will this mean a safer financial world? Maybe.