The Phase One of RMB Cross-border Inter-bank Payment System (CIPS) started operation on 8 October 2015. The CIPS, as an important financial infrastructure, provides clearing and payment services for financial institutions in the cross-border RMB and offshore RMB business. The CIPS is designed to be built in two phases. The first phase, when completed, facilitates processing of cross-border RMB business and supports settlement of cross-border trade in goods and services, cross-border direct investment, cross-border financing and find transfer for individual customers. The CIPS Phase One has the following features: real time gross settlement of fund transfer of both individual customers and financial institutions; one-point entry by all direct participants for centralized clearing through a shortened route of clearing to achieve efficiency; the adoption of ISO20022 message dash board for straight-through processing of cross-border businesses; its operation hours covering the time zones of Europe, Asia, Africa and Oceania, where the RMB business essentially take place.
In order to foster a market environment for fair competition, the PBC has released the Provisional Rules for the Operation of RMB Cross-border Inter-bank Payment System, and specified the access criteria of participants, account management and business processing requirements, to provide an institutional basis for the smooth functioning of CIPS. The Cross-border Inter-bank Payment and Clearing (Shanghai) Corporation Limited has been established to operate the CIPS independently. The Corporation is to be regulated by the PBC.
The first batch of direct participants of CIPS are 19 banks, i.e. Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, China Merchants Bank, Pudong Development Bank, China Minsheng Bank, Industrial Bank, Pingan Bank, Huaxia Bank, HSBC Bank China, Citibank China, Standard Chartered Bank (China), DBS China, Deutsch Bank (China), BNP Paribas China, ANZ Bank (China) and Bank of East Asia. Moreover, 38 domestic banks and 138 overseas banks located in Asia, Europe, Oceania and Africa have participated in the system as indirect participants.
Since 2009, the PBC has adopted a series of policy measures to facilitate the cross-border use of RMB in trade and investment, and the international acceptance of RMB. The RMB business agent banks and RMB clearing banks are designated to support the cross-border payment of RMB. With RMB becoming the 2nd largest cross-border payment currency in China and the 4th most used payment currency globally, it is imperative to build infrastructure to support the development of RMB business. After careful and thorough study, and with the active cooperation and support of commercial banks, the PBC started to build the CIPS. The Party Central Committee and State Council has attached great importance to the project. Premier Li Keqiang pointed out in the Report on the Work of the Government delivered to the NPC and CPPCC sessions in 2015 that it was necessary to speed up the building of CIPS to improve RMB global clearing service.
The operation of CIPS, as a milestone in financial market infrastructure development in China, marks a major progress in the building of a modern payment system that supports both domestic and cross-border payment of RMB. Moreover, CIPS complies with Principles for Financial Market Infrastructures and other international regulatory requirements and will be a boost in the process of RMB internationalization. (Resource: PBC Website)
