At the same time, Asia-based businesses are developing ‘local-to-local’ networks which support the growing role of the RMB through hubs like Singapore, a financial centre which will be at the forefront of facilitating RMB and BRI investments across Asia.
“Singapore is the only regional financial centre with the depth of capital and expertise to take on the types and levels of lending required in BRI projects.”
While the near-term outlook on RMB usage among global currencies may fluctuate, this picture is set to change as BRI takes shape. Estimated to reach over $US 1.3 trillion in total investments by the mid-2020s, the sheer size and ambition of BRI will need the participation of banks who will provide the structural, legal and financing framework for it to be a success.
Meanwhile, much of China’s investment in ASEAN will likely be project financing related, particularly oil exploration, pipelines and ports in support of long-term trade growth.
This framework brings Singapore front and centre within the regional banking system – where it is already the preferred booking point for offshore loans into ASEAN and increasingly into mainland China.
Singapore is the only regional financial centre with the depth of capital and expertise to take on the types and levels of lending required in BRI projects.
For 2018, the engineers of global RMB growth in Beijing have signalled the next series of major investment and trade channels will soon be established.
While no single development is likely to mark the moment when the RMB has become fully internationalised, an inflection point has arguably already been crossed for the currency throughout Asia.
In the right setting, banks and businesses outside China are now able to work on a daily basis with their Chinese commercial partners to build ‘local-to-local’ networks which allow the RMB to be utilised across country, regional and global markets.
Singapore has long remained the financial core of South East Asia (ASEAN) and since the era of globalisation began, the city has renewed its role as the cultural, transportation and economic gateway into the region.
These strengths are now evolving to establish the foreign exchange, currency settlement, capital raising and regulatory linkages outside of China for the RMB.