Cross-border Interbank Payment System (hereinafter referred to as the “CIPS”) is a wholesale payment system authorized by the People’s Bank of China (hereinafter referred to as the “PBC”). Specializing in RMB cross-border payment clearing, CIPS takes efforts to provide reliable, efficient, convenient and low-cost clearing and settlement services. As one of important financial market infrastructures (FMIs) in China, CIPS has played a positive role in contributing to the development of Shanghai international financial center, promoting two-way opening-up of the financial sector, strengthening financial support to China’s real sector economy, serving the Belt and Road Initiative (BRI) financing and facilitating the global use of RMB.
With growing demand for RMB in the cross-border transactions and the expanding scale of RMB cross-border business, it is imperative to put in place a RMB cross-border payment and clearing system. In 2012，the PBC launched the construction of CIPS (phase 1) after in-depth research and discussion. On October 8th, 2015, CIPS (phase 1) was successfully put into operation, with 19 Direct Participants and 176 Indirect Participants from 50 countries and regions all over 6 continents. The launch of CIPS was another milestone in the construction of China’s financial market infrastructures, which marked the important progress in the development of China’s modern payment system that integrated domestic and overseas payments of RMB. CIPS played a significant role in facilitating RMB being officially included in the Special Drawing Rights (SDR).
As a China’s financial market infrastructure, the construction and operation of CIPS are in line with international standards in the spirit of self-discipline and compliance, and also strictly abide by Principles for Financial Market Infrastructures and Core Principles for Systemically Important Payment Systems in terms of system design and rule establishment.
CIPS has operated stably with a 100% availability after its launch. The expanding scale of participants, steadily increasing transaction volumes and progressive elaboration of the system functions are clearly observed.
By the end of 2019, CIPS had 33 Direct Participants and 903 Indirect Participants (from 94 countries and regions) with an increase of 74% and 413% as compared to that in 2015, respectively. Through these Direct and Indirect Participants, the network of CIPS has reached 3000+ banking institutions over 167 countries and regions.
The number of participants from the BRI countries and regions has gradually increased. By the end of 2019, 1017 banking institutions from 59 BRI countries and regions (including mainland China, Hong Kong SAR, Macao SAR and Taiwan) ran their business via CIPS.
CIPS is constructed in phases. After CIPS (phase 1)’s successful launch, its functions have been steadily improved, which led CIPS (phase 2) to operation consequently.
On October 9th, CIPS (phase 2) put into operation the DVP settlement and supported Northbound Trading of Bond Connect, which would reduce settlement risks and improve efficiency of cross-border bond transactions.
On March 26th, 2018, CIPS (phase 2) was launched on a pilot basis, with 10 Direct Participants. On May 2nd, 2018, CIPS (phase 2) was in its full operation with other qualified Direct Participants.
Compared with phase 1, CIPS (phase 2) has the following features:
(1) More settlement modes. The Deferred Net Settlement (DNS) mechanism has been introduced on the basis of the Real-Time Gross Settlement (RTGS) to offer a liquidity-saving hybrid settlement mechanism.
(2) Supporting financial market transactions. To meet needs for diverse financial transactions, CIPS supports settlement and clearing for RMB remittance, Delivery versus Payment (DvP), Payment versus Payment (PvP), Central Counterparties (CCP), and other RMB cross-border transactions.
(3) Extended service hours. The operation time of CIPS has been extended from 5×12 hours to 5×24 hours + 4 hours, covering almost all financial markets in every time zone. Considering overseas participants and their local customer’s use of RMB, CIPS (phase 2) supports intra-day RMB settlements.
(4) More types of Direct Participants. FMIs as Direct Participants are introduced. CIPS is ready to have more overseas Direct Participants.
(5) Improved message design. CIPS enriches message types, enlarges message scalability and optimizes message field definition, which facilitates compliance management of participants and regulators.
(6) CIPS backup system. The capacity of real-time data transmission from main system to backup system improves business sustainability of CIPS.
CIPS Co.,Ltd. ShangHai ICP NO.15056468