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.

Revising the liquidation procedures for similar financial institutions with cross-border presence is another area that will confront the public authorities in the world with a stronger challenge. The main purpose of the reform of the financial regulatory framework will be to accommodate new incentives that will create a stronger environment for risk management in the financial industry. The main principle here is “prevention is the better cure”. In this regard, the perimeter of the supervision regulatory framework will be extended to include other important non-bank financial institutions and probably the bank holding companies. At the same time, the approach in the regulatory framework is expected to feature more automatic  2  BIS Review 139/2009  requirements (and less discretionary ones), as it tries to move toward more simplicity and clarity. The move toward simplicity and clarity, will certainly reduce manipulability and enhance transparency and credibility of the banking and financial activity. These changes will be complemented by similar ones in the area of customer protection and market transparency. The regulatory framework of the financial industry is also expected to be less pro-cyclical, as new interesting proposals are being identified to adopt a countercyclical approach for capital requirements, provisioning and accounting. Ensuring responsible governance for the banking and financial institutions is going to be another area of developments. New regulatory requirements and instruments to seek more involvement and higher responsibility of boards of directors for risk management and discourage uncontrolled risk undertaking are being identified.