Singapore enjoyed a good start last week as the first offshore clearing centre for the renminbi (RMB) outside Greater China.
Now, it needs to build on this foundation to become a stable, thriving yuan hub - and it is already exploring new ways with the top Chinese leadership to make this happen.
"Our approach is to work closely with the Chinese authorities to ensure that we have a sustainable offshore RMB centre, not just the sort that allows for easy speculation in the RMB," Deputy Prime Minister Tharman Shanmugaratnam told the Singapore press in Shanghai on Saturday.
Financial cooperation was one of the four key areas in which Beijing has shown "a great keenness" to work with Singapore, according to the Finance Minister.
He was summing up the past six days of his week-long trip to Beijing and Shanghai, which kicked off last Tuesday with a meeting with executive vice-premier Zhang Gaoli.
The Chinese leader was keen on exploring cooperation in the areas of human resources, environmental, social and financial management.
"He was already thinking actively about what the Joint Council for Bilateral Cooperation (JCBC) should do to ensure that current projects come to full fruition and the new directions that it could take," said Mr Tharman.
Mr Zhang has been named co-chair of the JCBC, a high-level council overseeing Sino-Singapore ties.
This marks the first time a member of China's apex ruling body, the Politburo Standing Committee, has taken this position.
Singapore can share its experience as it faces the same concerns as China, such as urbanisation, financial liberalisation and managing the environment.
"At this stage of China's development, we can add value," said Mr Tharman.
He also highlighted his "very useful discussions" on financial cooperation with other leaders like central bank governor Zhou Xiaochuan and top securities regulator Xiao Gang.
"We have a good meeting of minds with the Chinese authorities on this matter," he noted, referring to the goal of creating a sustainable yuan hub in Singapore.
Such a centre would "have a variety of products, including innovative products; it will be integrated with the rest of our financial centre and it must attract both borrowers and investors from different profiles", Mr Tharman said.
It would not be a place that allowed for easy speculation of the yuan, which shot to a 19-year high last month as opportunistic investors bet on it rising further.
Mr Tharman said China and Singapore were exploring ideas such as the possibility for Singapore-based companies to put their surplus liquid RMB assets together into a bigger pool so the money could be more efficiently managed.
They were also looking at ways to widen RMB-denominated investment and borrowing options in Singapore.
This could involve offering bonds with longer tenures, as well as an arrangement where firms may issue financial products recognised in both Singapore and China as they met the same standards of disclosure and transparency.
But there would be no big-bang changes overnight.
The ideas raised would require "extensive discussion" and both sides would proceed "step by step", in line with what Beijing wants, Mr Tharman said.
He added: "I think it's early days but there's a good journey ahead in RMB internationalisation and we should go about this patiently and in a calibrated fashion."
Singapore is often compared to rival financial hub, Hong Kong, which hosts China's first yuan-clearing hub and serves as a testbed for foreign exchange and yuan reforms.
But Mr Tharman noted that Beijing does not impose a common template on Singapore or Hong Kong. Instead, China sees Singapore as "a useful partner" with its own characteristics and strengths such as a strong, international asset management community.
"They will want to make use of those strengths that we have," he added.
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