MAS Seeks Cooperation with China on Green Finance

MAS managing director Ravi Menon suggests that China and Singapore work together to create frameworks for green and sustainability-linked loans, customised for Chinese and Singaporean SMEs.

MAS (Monetary Authority of Singapore) managing director Ravi Menon has called for deeper cooperation between China and Singapore to facilitate the post-Covid economic recovery and promote green finance between the two countries.

“Finance can play a key role in facilitating this economic recovery and integration. China and Singapore can help to blaze a new trail in financial cooperation and innovation in Asia,” Menon said, speaking at the Lujiazui Forum on Thursday (18 June).

Financial cooperation has been a highlight of Singapore’s 30-year bilateral relationship with China, he said, pointing to Singapore’s growing status as an offshore RMB market, enhanced capital market linkages between the two countries, and opportunities for financial institutions to grow in each other’s market.

In Singapore, Bank of China and ICBC are two of only nine qualifying full banks, while five other Chinese banks are licensed as wholesale banks. Meanwhile, all three Singapore-headquartered local banks are incorporated in China.

This year will also see the launch of the Singapore-Shanghai Comprehensive Cooperation Council Financial Working Group, which will facilitate participation between financial institutions in the two cities in areas such as cross-border RMB business and product innovation.

Menon suggests green finance as one of the important areas where Shanghai and Singapore can work together to further expand on this record of cooperation.

“Both China and Singapore are committed to meeting their sustainability goals under the Paris Agreement. Both countries have embarked on ambitious green finance agendas,” he said. “As we stimulate our economies to bounce back from the Covid-19 crisis, there is a good opportunity for Shanghai and Singapore to collaborate on promoting green finance in the region.”

Highlighting existing partnerships between Chinese and Singapore banks to finance green and sustainable projects, Menon suggested that the two countries work together to create frameworks for green and sustainability-linked loans, customised for Chinese and Singaporean SMEs.

Such frameworks can help promote cross-border syndications in green loans, reduce the borrowing costs of SMEs, promote economic transformation and upgrading, he said.

Menon also suggested China and Singapore work together to apply innovative fintech solutions to promote green finance, citing the SDFA (Sustainable Digital Finance Alliance) as an example.

The SDFA was founded by Alibaba’s Ant Financial and UNEP (United Nations Environment Programme) to help align the financial system with the needs of sustainable development through the use of digital finance and fintech innovation.

According to Menon, the SDFA has engaged the fintech community on applying digital technology to promote green finance – such as through the digitisation of green bonds.

Earlier this month, MAS announced the launch of its annual Global FinTech Hackcelerator, which invites financial institutions and fintechs from across the world – including Shanghai – to collaborate on innovative green finance solutions.

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