Cross-Border Interbank Payment System to be Launched Soon
China is planning to launch a cross border interbank payment system before the year ends. According to the deputy governor of the People’s Bank of China Yi Gang, during the discussion at the National Committee of the Chinese People’s Political Consultative Conference that the capital account is gradually opening up and capital flows keeps on growing.
China also is aiming to build a cross border payment and clearing system that will handle any large sums of capital and integrate it with any domestic real time gross settlement system. The launching of the CIPS greatly increase global usage of the Chinese currency as transactions are cut along with processing time. Using the Cross-Border Interbank Payment System, the central bank can improve on the efficiency of cross border payment settlements in yuan and control better the systemic risk associated with cross border payment using information monitoring.
China depends on offshore yuan clearing banks and other correspondent banks in China for any cross border yuan clearing, but the channels can no longer support its rapid growth of cross border yuan settlements. As of September 2014 cross border yuan settlement have exceeded 4.8 trillion yuan up for 3.58 billion yuan in 2009.
The Cross-border Interbank Payment System will replace patchworks of networks that made yuan denominated payments a complicated process. The old networks were designed to meet the demands of over seas settlement in yuan in certain regions, but now having a top level design that comprehensively promote internationalization of payments and clearing system