China today launched its cross-border renminbi payments systems, the Cross-Border Interbank Payment System (CIPS). It is widely seen as a step towards boosting the Chinese currency as an international trade and payments currency.
The Chinese arms of eight foreign banks have been selected as direct participating banks in CIPS, including Deutsche Bank, HSBC, Citi and Standard Chartered.
The Financial Times reports that the creation of CIPS is also a means for China to “protect itself from US spy agencies with access to the Swift system”.
As CTMFile reported yesterday, the yuan has already overtaken the Japanese yen to become the fourth most-used payments currency by value in the world, although its share of the value of total payments remains low at 2.79%.
CIPS was created by the People’s Bank of China (PBoC) and is run by the CIPS Clearing Company. It provides an independent cross-border payment and clearing system connecting both onshore and offshore clearing markets and participating banks. CIPS uses global payment standards and enables same day clearing across Asia, Oceania, Europe and other time zones through extended operating hours.
Carl Wegner, Deutsche Bank's managing director and Greater China head of global transaction banking, said: “By integrating the existing Renminbi cross-border payment and settlement channels, CIPS will improve the efficiency of cross-border clearing to meet the increasing demand for Renminbi worldwide. CIPS will also enhance and facilitate the security of transactions, thereby benefitting the industry as well as our clients.”
CTMFile Take: As corporate treasurers know, executing renminbi payments to and from China can be a slow and expensive process. CIPS will facilitate this.