This system is a way for Beijing global financial architecture to compete with powerful countries. Beijing wants to use this system as a tool to help it achieve its goals and become more powerful. The main idea is that Beijings Global Financial Architecture system will be a part of its plan to rival other countries. Beijings global financial architecture is very important, to Beijing.
China made a system called the Cross-Border Interbank Payment System. This system is also known as CIPS. China wants to use its money, the renminbi, when it trades with other countries.
This will make things easier for China when it buys and sells things from countries. It will also help stop people from sending money.. It will protect China from getting in trouble with other countries. A lot of banks are now using the Cross-Border Interbank Payment System. This happened fast.
China wants the renminbi to be used more and more. China hopes that one day the renminbi will be used much as the US dollar. China thinks that if the renminbi is used more then the US dollar will not be the important currency in the world. The Cross-Border Interbank Payment System and the renminbi are very important, to China.
A Strong Global Financial Architecture Foundation
Starting to take shape. This financial backbone. It will be the financial backbone that holds everything together. The financial backbone is what people need to feel safe and secure. When the financial backbone emerges it is a thing, for the financial backbone.
On 8 October 2015 China started a payments system the Cross-Border Interbank Payment System or CIPS for short that uses the Chinese currency, the renminbi also known as the RMB for payments, between countries.
China also said it would create the China International Payment Service Corporation or CIPS Corp. Limited, to run the Cross-Border Interbank Payment System. The China International Payment Service Corporation is watched over by the bank of China which means the central bank of China supervises the Cross-Border Interbank Payment System and the China International Payment Service Corporation.
The new payment system and the financial e-infrastructure that comes with it help banks with money transactions that involve the currency particularly when these transactions happen across borders or outside of China. People who watch these things closely think this is a deal for Chinas plan to make its currency more popular around the world. When this system was first launched the Industrial and Commercial Bank in Singapore used it to clear thirty five million currency, which is equal, to seven point eight million United States dollars on this new payment system called CIPS. This was the time ICBC did something like this. It was a payment for a trade settlement from Raffemet Pte Ltd in Singapore to Baosteel Resources in Shanghai.
On the day the Bank of China in Sydney did its first transaction in Chinese money through CIPS. This was a payment of 37 million Chinese money to China for an Australian company.
The Standard Chartered bank also did its transaction in Chinese money through CIPS on that day. This was a payment from China to Luxembourg, for IKEA. ICBC and these other banks were all doing money transactions through CIPS. Standard Chartered, in Hong Kong thinks that CIPS is really important. They even said that CIPS is a game changer. Standard Chartered also said that the power of CIPS should not be underestimated. They really believe in the power of CIPS.
The deputy governor of the Peoples Bank of China Fan Yifei says that the China International Payment System or CIPS is a step forward for the Chinese money, the RMB to be used all around the world.
Fan Yifei thinks that CIPS will help the RMB to be used globally because it will make things cheaper and faster. The RMB and CIPS will also be very important for Chinas economy. Will help Chinese companies do business in other countries.
The Peoples Bank of China and Fan Yifei believe in the RMB and CIPS. What they can do for China and its economy. The RMB is Chinas money and CIPS is a system that will help it to be used more, over the world. The central bank said in a written statement that Chinas financial market infrastructure has taken a step forward with CIPS.
CIPS is a deal for Chinas Global Financial Architecture
It shows that China has made progress in building a modern payment system for the Chinese currency, the RMB. This system can handle payments within China and payments between China and other countries all in RMB.
The central bank thinks CIPS is very important for the development of Chinas financial market infrastructure and for making payments, in RMB easier.
The reasons behind it Global Financial Architecture
Why was the China International Payment System created? Chinas central bank says that since 2009 Beijing has made a lot of changes to help the currency, the RMB be used more in trade and investment across borders. The main goal of these changes is to get more people, around the world to accept and use the RMB. China wants the RMB to be used internationally. Before China International Payment System or CIPS China did most of its cross-border RMB clearing through banks. These banks were located outside of China. Were picked by Chinas central bank to handle transactions in Hong Kong, Singapore, London and later in Toronto and Vancouver. The bank that handled this in Toronto and Vancouver was ICBC Canada, which is located in Toronto. There was another way to do -border RMB clearing, which was through a special bank, inside China called an onshore RMB Agent Bank. However people did not use this method much as the other one. The clearing banks are really important because Chinas system for moving money between banks the China National Advanced Payment Systems does not connect directly to the systems that handle payments between countries. This means the clearing banks are still necessary for China to do business with other countries. The China National Advanced Payment Systems is used for payments, within China. It does not work with the international payment networks.
The system that China has been using since July 2009 to help the Chinese money, which is called the RMB be used in countries had some problems. The RMB payments to and from China were very slow and expensive to make. The Financial Times said this. They also said that the system China used for payments, inside the country only worked with characters. This meant it did not work with the system that banks use to send payment information to each other. The RMB system had these limitations before China started using the CIPS system. Bank analysts said that sometimes people did not understand each other with the pre-CIPS clearing systems. This happened because Bank analysts found out that people used codes and Bank analysts noted that people spoke different languages. Bank analysts pointed out that these things caused misunderstandings, with the preCIPS clearing systems.
People who are watching this say that CIPS is a deal because it is a single platform that makes things work better. Reuters says that CIPS is going to make a difference for the Chinese currency, the yuan. It will make it easier for people to use the yuan around the world. This is because it will lower the costs of transactions and make them happen faster.
When CIPS is launched it will be like a road for payments in yuan that everyone can use. This will replace the way of doing things, which was, like a bunch of small roads that did not work well together. The old way made it hard to process payments in yuan. Cips will make it easier. CIPS and the yuan are going to change the way people make payments. The yuan will be used often because of CIPS. The mix of banks and networks that handle money is a problem. People are worried about dishonest activities. For example the Chinese government has found out that some Chinese bank branches are doing things. These banks are using their systems to bring Chinese money back, into the country for wrong purposes. The Chinese regulators have caught them doing this. These banks are supposed to be helping with money transactions but they are using their internal systems to do illegal things instead.
The Peoples Bank of China says that the current system is not good enough. They wrote that since the RMB is now the most used currency for cross-border payments in China and the fourth most used in the world they need to make the system better to help RMB business grow.
The China International Payment System is meant to make it easier for companies outside of China to do business with companies, in China. It lets them work directly with each other when it comes to RMB transactions, which means there are steps to take when making a payment. The person in charge of money at a company in Europe that is based in Hong Kong says that using CIPS to clear payments is a big deal for small and medium sized businesses in China. These businesses can now use their banks to access a network to settle payments in Chinese money, which means they will save money.
CIPS is also good for companies because they do not have to worry about making sure their Chinese money transactions are only done at certain times of the day. This makes things easier for them. Saves time. The head of treasury says CIPS is a development for small and medium sized businesses, in China because they can now use CIPS to clear payments directly.
Statecraft and strategy Of Global Financial Architecture
The things we talked about earlier show that the CIPS system is mostly about stuff.. We should not forget that CIPS was also made because of big policy goals and it is connected to the competition, between China and the United States. The central bank says that the Central Committee of the Chinese Communist Party and Chinas State Council think the CIPS project is very important. The Chinese Premier gave a report to the National Peoples Congress and the Chinese Peoples Political Consultative Conference in March 2015. Li Keqiang said that the Chinese government will make progress in making the RMB capital accounts convertible. The RMB will be used internationally. A cross-border payment system for the RMB will be set up faster. The worldwide clearing system for the RMB will be improved.
The Peoples Bank of China understood what the Premier said. They thought the Premier meant that they need to work on building the China International Payment System and make the RMB global clearing service better. This will help promote the use of the RMB. The main goal is to make the RMB an important currency, in the world. The Chinese government wants to see the RMB used worldwide.
The creation of CIPS shows that Chinas top Party leaders now think it is an idea to support the use of different currencies around the world and to use Chinas currency more globally. Chinas leaders also think it is an idea to slowly open up the capital account and give the market a bigger role, in Chinas financial sector. They want the market to play a role in deciding the exchange rate. For a time since the early 2000s China has been telling the international community that it should use different currencies. Since 2009 China has been working to make this happen. Chinas leaders want to see the Chinese currency used more around the world. The Chinese government has taken some steps to make the RMB a big player in trade. One of the things it has done is promote the use of the RMB all around the world.
The China International Payment System or CIPS for short is going to make a difference when it is fully up and running. CIPS will make it possible for people to make RMB transactions and investments at any time of day or night. This means people can trade RMB all the time, twenty four hours a day.
The system we have now does not let people do RMB transactions all the time. This new system is a change, from the way things are done now with the dual clearing system. The RMB will be used a lot more with CIPS.
Beijing is helping the currency, the RMB to be used more around the world. This means the US dollar will not be as important as it is now. China wants to reduce the power of the US dollar. China did a job in 2014 and 2015. They convinced the International Monetary Fund members to include the RMB in the group of currencies that’re part of the Special Drawing Rights. The Special Drawing Rights is a tool that the International Monetary Fund uses to manage their money. By doing this China is trying to make the RMB an important currency. The RMB is now part of the Special Drawing Rights, which’s a big deal, for China and the RMB. In October 2016 the Chinese money, which is the RMB became part of the group of money called the SDR reserve basket. The RMB is now with the US dollar, the euro, the Japanese yen and the British pound, in this group.
The city of Beijing is working on something called CIPS. This is Beijings way of making things and systems that help the RMB be used more around the world. They want the RMB to be accepted everywhere. They are making a better system for people to send money across the world. This will help the RMB become an important money worldwide.
The China International Payment System or CIPS is a part of the electronic payments platform for the Belt and Road Initiative. The Belt and Road Initiative is a plan for the Peoples Republic of China. Xi Jinping talked about this plan in 2013. On in November 2017 it was added to the Partys Constitution.
The leaders of the Chinese Communist Party think the Belt and Road Initiative is a way to help countries along the way grow and trade with each other more. They believe it will bring international trade to the region. The Belt and Road Initiative is also a chance for China to promote the use of the Chinese currency, the RMB in many parts of Asia, Africa and Europe. The Chinese Communist Party sees the Belt and Road Initiative as a way to make the RMB an important currency, around the world. The China International Payment System or CIPS is a way to make transactions cheaper. This helps the China International Payment System make businesses more competitive. The China International Payment System also helps prevent money problems. The China International Payment System can speed up trade and economic cooperation between countries in the Belt and Road Initiative region. The China International Payment System can even help countries, in the Belt and Road Initiative region work together on money matters.
Beijing is worried about the United States using financial sanctions more and more. China has seen what happened to Russia, Iran, North Korea, Sudan and other countries because of these sanctions. China also remembers when the United States stopped trading with China and would not let China use its system during the Cold War. The Chinese government knows that some countries are asking SWIFT to help with these sanctions and they want SWIFT to stop countries like China from using it to make payments. China is concerned about the United States financial sanctions and how they are affecting other countries, like Russia, Iran, North Korea, Sudan. China knows that the government of Moscow the government of Tehran and other governments really want to create systems for international payments or make the systems they already have stronger. This is because they want to reduce the problems that can come from sanctions by the United States. China is aware that the government of Moscow and the government of Tehran are very interested, in this.
The Chinese have a payment system called CIPS that is working properly. This CIPS is good for China because it helps China not have to use SWIFT much. Beijing knows that American and European banks are in charge of SWIFT and that these banks like to deal with US dollars. The Chinese think that SWIFT helps the US dollar be the important currency in the world.
Beijing is also worried that American security people can look at payments that go through SWIFT, which’s a problem for China. The Chinese want to use their system, CIPS so they can be more in control of their payments and not have to worry about American security people looking at what they are doing. CIPS is a deal, for China because it helps them move away from SWIFT.
Expanding The Network Of Participants Global Financial Architecture
The network of banks that are part of the China International Payment System or CIPS has gotten a lot bigger since it started in October 2015.
CIPS has banks working with Global Financial Architecture
The number of banks that can clear payments with CIPS has gone up from 19 banks in October 2015 to 31 banks in February 2018. At the time the number of banks that clear payments indirectly, with CIPS has also increased.
It Went From 198 Banks To 681 Banks Global Financial Architecture
So the CIPS network is really. More banks are joining CIPS. The first group of direct clearing banks in CIPS had eleven banks from the Peoples Republic of China. These China banks were ICBC, Agricultural Bank of China Bank of China China Construction Bank, Bank of Communication China Merchants Bank, Pudong Development Bank, China Minsheng Bank, Industrial Bank, Pingan Bank and Huaxia Bank.
There were also eight banks from countries, in this group. These foreign banks were HSBC China, Citibank China, Standard Chartered Bank China, DBS China, Deutsche Bank China, BNP Paribas China, ANZ Bank China and Bank of East Asia. The China International Payment System or CIPS had a group of clearing banks at the beginning. China International Payment System or CIPS had 38 domestic banks in this group. There were also 130 banks that were part of this group in the China International Payment System or CIPS. These overseas banks were located in parts of the world such, as Asia, Europe, Oceania and Africa and they were all part of the China International Payment System or CIPS.
The connections to North America have gotten bigger. A years ago in 2015 only seven banks in North America were part of this program.. By 2018 twenty-five banks in North America were participating. This includes seven banks in Canada. The banks, in Canada that are part of this are ICBC (Canada) BMO, CIBC, the National Bank of Canada HSBC (Canada) Bank of China (Canada) and CCB (Toronto). North America now has banks participating in this program than before.
There are reasons why so many people got involved in CIPS between 2016 and 2017. The main reason seems to be the agreement that CIPS Corp. And SWIFT made in March 2016. This agreement is called a Memorandum of Understanding or MoU for short. It is a plan for CIPS and SWIFT to work together. The plan is to connect CIPS to all the people who use SWIFT, around the world which’s a big community of global users of CIPS and SWIFT. The number of people and organizations using CIPS went up because banks that are part of the SWIFT network joined the CIPS network. SWIFT is a group that is owned by its members. It has than 11,000 banks and other financial institutions in over 200 countries. SWIFT is already helping with payments and settlements in than 150 systems around the world. Far over 1,700 financial institutions have used the SWIFT network to make transactions with the Chinese currency, the RMB using the SWIFT network and CIPS. CIPS is getting popular and more people are using it to make transactions, with the RMB. CIPS Corp. Is really interested in SWIFTs network. They like the way SWIFT has experience and expertise in building channels. These channels are also very efficient and reliable. They help connect payment systems with people around the world. CIPS Corp. Thinks this is very useful for an user community. They want to use SWIFTs network to make payments easier, for everyone. CIPS Corp. Believes that SWIFTs network is the way to do this because it is secure and efficient.
SWIFT has been working in China for over thirty years now. A lot of banks and companies almost 400 are already using SWIFT. SWIFT wanted to make a deal with CIPS because they knew China was thinking about creating its system to compete with SWIFT. This new system would help China make its money, the RMB popular around the world and make China safer. SWIFT is important to China and China wants to use the RMB internationally that is why SWIFT is interested, in working with CIPS. SWIFT was really worried about what China might do in the future. They were not sure if China wanted to get rid of SWIFT or replace it with something. China also wants to use its money, the RMB more around the world and not rely so much on the US dollar. So SWIFT was very happy to sign an agreement with CIPS Corp. This made them feel a lot better. SWIFT and the RMB are very important, in this situation. The RMB and SWIFT have a role to play.
CIPS Corp Beijing Global Financial Architecture
CIPS Corp. Is trying to make things easier by being the middleman between SWIFT and the China National Advanced Payments System, which is also known as CNAPS. The CIPS Corp. System is similar to the Clearing House International Payment System, which is also called CHIPS. This CHIPS system is used for payments in US dollars. It handles about one and a half trillion dollars every day. According to The Financial Times CIPS Corp. Will start by using SWIFT for messages between banks. Later on, CIPS Corp. Will be able to work on its own without needing SWIFT. CIPS Corp. Is really trying to make payments smoother, with this system. The new CIPS system will also let offshore banks take part in payments in money from one place outside of China to another place outside of China. It will also let them make payments into and out of China.. For now only banks in China are using the system.
A reporter from the Financial Times talked to someone who knows about the plans of the PBOC for CIPS. This person said that CIPS will have its special connection for talking to other banks. The person said that when this happens CIPS will be able to replace SWIFT. The CIPS system is going to be very important for payments, in money and it will change the way these payments are made. The CIPS system and the Chinese money payments will be more convenient for everyone involved.
At the ceremony where CIPS Corp. And SWIFT signed their agreement the Executive Director of CIPS Corp. Li Wei said that China International Payment Service Corporation is really looking forward to using SWIFTs platform and services. This will help CIPS Corp. Give the financial community a way to make payments that is easy to use and works well. Li Wei also said that CIPS Corp. Is working with SWIFT to make sure that the MT messaging standards, which are used a lot for banking transactions between countries work, with the ISO20022 standards that CIPS Corp. Uses. They are doing this by creating a system to convert the messages. Li added, “We [CIPS Corp. and ‘China’] aim to provide an inclusive platform to capture cross-border RMB flows to all types of participants which will significantly extend the reach of RMB internationalisation”.
