BEIJING: In a move to facilitate more effective renminbi
liquidity management by Malaysian financial institutions, Bank Negara Malaysia will introduce a Renminbi Liquidity Facility (RLF) to licensed onshore banks.
The facility is aimed at enhancing renminbi liquidity in the domestic market by providing an additional avenue for licensed onshore banks to obtain or invest RMB with the central bank, said Bank Negara Malaysia Governor Dr Zeti Akhtar Aziz.
The bank, through its own access to the interbank market in China, would offer these liquidity facilities via the renminbi/ringgit foreign exchange market, and the renminbi money and repurchase markets in the Malaysian interbank market, the Governor said in conjunction with the opening of the Bank Negara
Malaysia's Beijing representative office here today.
She also announced that non-resident financial institutions that meet the prudential requirements would be permitted to offer ringgit trade financing in collaboration with resident financial institutions.
"In this regard, banks in China will also be allowed to provide ringgit trade financing in China," Zeti said.
A memorandum of understanding was also signed today between Bank Negara and the People's Bank of China to establish a cross-border collateral arrangement (CBCA) that will provide financial institutions access to the central bank's liquidity facilities.
The CBCA would enable the use of home currency collateral in the form of securities or cash to obtain domestic liquidity from the host country in the future, she added.
Bank Negara Malaysia signed CBCAs with the Monetary Authority of
Singapore and Bank of Thailand in 2011 and 2012, respectively.
On the establishment of the Beijing representative office, Zeti said it was Bank Negara's very first presence in Asia and was a reflection of the growing importance of China in the global economy and the international financial system.
The Beijing office, the third overseas after London and New York, became a reality after an agreement was signed by the Governor of the People's Bank of China Zhou Xiaochuan and Zeti in 2011 to facilitate the opening
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