Bank of China's Manila unit continues to provide Philippine financial institutions with access through the Bond Connect scheme to China's fast-growing economy.
The bank's country head Deng Jun said BOC is offering local participants the opportunity to invest in the world's third-largest bond market - the China Interbank Bond Market (CIBM) - which in August reached 90 trillion renminbi in outstanding bond size.
"As China opens its economy to the world, stakeholders gain a deeper understanding of the country's investment opportunities. This fuels global interest in capital denominated by the renminbi," Deng said.
Bond Connect is a new program of shared market access which enables Mainland China and overseas investors to interact with each other through a link between financial infrastructure entities in the mainland and Hong Kong. RMB's internationalization creates a natural demand for RMB investments, Deng explained.
Bond Connect has been playing an increasingly important role in improving two-way market access and opening up the Chinese bond market as the new cross-border bond trading and settlement scheme connecting mainland China and Hong Kong.
The Chinese government has taken a number of steps to strengthen the the scheme's related processes and services, including widening the Bond Connect market community, enriching the payment system, and growing the hedging opportunities for foreign exchange.
In addition, China announced a three-year tax exemption to invest in the CIBM for offshore investors, making Chinese bonds more attractive.
The CIBM has drawn tremendous interest from global investors, making it the world's fastest-growing bond sector. Renminbi-denominated assets have become one of the most attractive options for global investors, and the bond market in China has grown into the world's third-largest.
BSP Deputy Governor Chuchi Fonacier said RMB continues to play a wider position in international trade and financial markets during the latest RMB Internationalization and ASEAN Regional Settlements Forum in China.
Fonacier said RMB could also be a source of funding for financial institutions as the government tapped the bond market in China.
Meanwhile, for the rest of 2019, the central bank may have called for a halt to interest rate cuts and reductions in bank reserve requirements, but this does not mean that they have stopped releasing liquidity into the Philippine financial system.
The Bangko Sentral ng Pilipinas announced in a statement released on Friday that its policy-making Monetary Board approved the exemption of so-called deposit replacements from the calculation of the reserve requirements of banks.
