China Launches Yuan-Based International Payment System

© REUTERS / David Gray/FilesA 100 Yuan note is seen in this illustration picture in Beijing in this March 7, 2011 file photo
A 100 Yuan note is seen in this illustration picture in Beijing in this March 7, 2011 file photo - Sputnik International
Up to 19 major banks were named as direct participants in CIPS, with 38 Chinese banks and up to 140 foreign financial institutions named as indirect participants.

Chinese investors monitor screens showing stock indexes at a trading house in Shanghai - Sputnik International
China Plans to Launch Own International Payment System by 2016
MOSCOW (Sputnik) – China launched the first phase of its China International Payment System (CIPS) in Shanghai on Thursday, allowing cross-border transactions in the Chinese national currency, the yuan.

CIPS’ first phase provides clearing and settlement services, according to the People’s Bank of China announcement. Its launch is said to remove hurdles to the yuan’s internationalization by reducing transaction costs and processing times.

Up to 19 major banks were named as direct participants in CIPS, with 38 Chinese banks and up to 140 foreign financial institutions named as indirect participants.

The launch bolsters China’s efforts to join the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) basket. An announcement on the State Council’s website cited SWIFT transaction services data as calling the yuan one of the world’s top five payment currencies last November.

Coins and banknotes of the Chinese yuan are set up together with a U.S. dollar - Sputnik International
China's International Payments System Ready to Go
CIPS is vying to overtake SWIFT in the region. Developed and administered by the People’s Bank, the system operates from 9 am to 8 pm Beijing time (01:00-12:00 GMT).

Local media reported that the Beijing-based Industrial and Commercial Bank of China (ICBC), one of the 19 direct CIPS participants, has cleared its first transaction of 35 million yuan ($5.5 million) in Singapore.

Another direct participant, Standard Chartered Bank said it had also cleared its first transaction with the Swedish home furnishing retailer IKEA through CIPS.

Additionally, China has adopted the IMF's Special Data Dissemination Standard (SDDS), a move also seen to further internationalize the yuan.

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