The most pressuring challenge for the world economy is to achieve a sustained and inclusive economic growth. Beyond the short-term volatility in the international financial markets, the prospects of the Asian region are well anchored on solid fundamentals, and underpinned by our economic and policy flexibility and years of reforms. Collectively, the Asian region will be an important growth center in the world economy contributing to global stability. China in particular has been successful in rebalancing its economy amidst structural adjustments and reforms that brings its economy to a sustainable growth trajectory. With the progressive move by China towards the internationalisation of their financial system in the years to come, there will be increased interconnectedness of the Chinese financial system with the rest of the region and the world and consequently, a wider role of the renminbi as it continues to grow in importance in international trade and financing activity. It would be inevitable that the renminbi will become an important reserve currency in the international financial system. Against this development, the opening of the Bank Negara Malaysia’s Beijing Representative Office builds on the deep ties that has already been forged and signifies our confidence and commitment to this future. The Beijing office will also serve as a key point for the Chinese financial community to engage Malaysia and understand the opportunities available in our countries. Finally, I would like to express our great appreciation to the People’s Bank of China for their approval and support for the Bank’s representative office.

In 2009, Bank Negara Malaysia entered into a Currency Swap Agreement (CSA) with the People’s Bank of China, which was renewed in 2012 with an expanded amount of RMB180 billion, with the objective to ensure a ready supply of renminbi in the domestic financial markets to meet the demand by businesses. Efforts were also made to enhance the transparency in the exchange rate between renminbi and ringgit transactions. In 2010, a direct market quote of renminbi against the ringgit was initiated in the Kuala Lumpur interbank market as well as in the interbank foreign exchange market on the China Foreign Exchange Trade System (CFETS). With these developments there is now a direct renminbi/ringgit quotation in the spot market and a renminbi/ringgit forward exchange rate for the Malaysian market. To further facilitate transactions, the real time gross settlement (RTGS) payment system in Malaysia has also been expanded since 2012 to include settlement services in renminbi. The size of renminbi trade settlement in Malaysia is expanding progressively reflecting the shift among both Malaysian and Chinese companies across the commodity, manufacturing and services sectors. There are also now 19 financial institutions that facilitate renminbi trade  BIS central bankers’ speeches  1  settlement, double the number in 2009. There is also a growing interest in raising financing in renminbi in the Malaysian bond market. In 2011, Khazanah Nasional Berhad successfully issued the world’s first offshore renminbi sukuk in 2011 and subsequently Axiata Group Berhad issued the world’s first rated renminbi sukuk in 2012.