SWIFT has signed a memorandum of understanding (MoU) that sets out plans to develop China’s Cross-border Interbank Payment System (CIPS) using SWIFT as the secure channel to connect CIPS with its global user community.
SWIFT chief executive (CEO) of Asia Pacific and Europe, the Middle East and Africa (EMEA), Alain Raes and CIPS executive director, Li Wei signed the MOU in Beijing last Friday (March 25).
“China International Payment Service Corp is looking forward to benefitting from SWIFT’s platform and services to provide an efficient and convenient channel to the global financial community,” said Li. “We aim to provide an inclusive platform to capture cross-border renminbi (RMB) flows to all types of participants which will significantly extend the reach of RMB internationalisation.”
Li said that the payment system is working with SWIFT to make MT messaging standards, widely used in cross-border banking transactions, compatible with the ISO20022 standards used by CIPS, through a conversion scheme.
CIPS had 19 directly participating banks and another 176 banks indirectly involved when it launched last October. Indirect participants have since risen to 253, but the increase is small when compared with overall growth of the Chinese currency in global payments, according to Zhang Xin, general manager of CIPS.
Another dozen banks are expected to become direct participants by the end of 2016 and the system will be connected to the bond and foreign exchange (FX) markets. An extension of operating hours to handle transactions with the Americas is being considered.
Raes added: “SWIFT is a global messaging provider supporting more than 150 payment and settlement systems, and CIPS is a payment system. There are natural synergies between global financial messaging services, such those provided by SWIFT, and payment systems. Working with such market infrastructures is at the heart of our business”.
SWIFT has operated in China for over 30 years and said that nearly 400 Chinese financial institutions and corporations are connected to its platform. To date, 1,700 financial institutions have made RMB transactions using the SWIFT network.
SWIFT has announced that it has successfully completed the first phase of the global payments innovation (GPI) initiative pilot, clearing the way for the go-live of the service in early 2017.
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