Cross-Border Interbank
Payment System
TypeCooperative
IndustryTelecommunications
Founded2015
HeadquartersShanghai, China
ProductsFinancial telecommunication
Websitecips.com.cn/en

The Cross-Border Interbank Payment System (CIPS) is a payment system which offers clearing and settlement services for its participants in cross-border RMB payments and trade. Backed by the People's Bank of China (PBOC), China launched the CIPS in 2015 to internationalise RMB use. CIPS also counts several foreign banks as shareholders including HSBC, Standard Chartered, the Bank of East Asia, DBS Bank, Citi, Australia and New Zealand Banking Group and BNP Paribas.

In 2021, CIPS processed around 80 trillion yuan ($12.68 trillion), with about 1280 financial institutions in 103 countries and regions having connected to the system.[1][2]

History

In 2012, the PBOC launched the construction of CIPS (phase 1). On October 8, 2015, CIPS (phase 1) was 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 infrastructure, 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).

March 2016, SWIFT and CIPS sign memorandum of understanding (MOU). ISO 200022 standard already adopted by CIPS for its payment system, SWIFT went through the implementation process of the standard that can allow the use of Chinese characters in addition to its richer content functionalities.[3][4]

September 2017, As one of MOU plan signed between SWIFT and CIPS, reference data indicating financial institutions’ direct and indirect participation to CIPS will be published via SWIFTRef and updated on a monthly basis. This data covers BIC, LEI, national bank codes and IBAN data, standing settlement instructions, credit ratings, as well as financial institutions’ memberships to domestic and cross-border payment market infrastructures.[5]

After the launch of CIPS (phase 1), its functions have been steadily improved, which led to the operation of CIPS (phase 2).

On March 26, 2018, CIPS (phase 2) was launched on a pilot basis, with 10 direct participants. On May 2, 2018, CIPS (phase 2) was in its full operation with other qualified direct participants. On October 9, CIPS (phase 2) put into operation the Delivery Versus Payment (DVP) settlement and supported Northbound Trading of Bond Connect, which would reduce settlement risks and improve efficiency of cross-border bond transactions.[1][2]

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. 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.

In 2021, CIPS processed around 80 trillion yuan ($12.68 trillion), with about 1280 financial institutions in 103 countries and regions having connected to the system.[1][2]

Standards

CIPS uses the SWIFT industry standard for syntax in financial messages. Messages formatted to SWIFT standards can be read and processed by many well-known financial processing systems, whether or not the message traveled over the SWIFT network. SWIFT cooperates with international organizations for defining standards for message format and content. CIPS also subscribes to registration authority (RA) for the following ISO standards:[6]

In RFC 3615 urn:swift: was defined as Uniform Resource Names (URNs) for SWIFT FIN.[7]

Products and participants

The main functions of the CIPS are to facilitate processing of cross-border RMB business and to support settlement of cross-border trade in goods and services, cross-border direct investment, cross-border financing and cross-border individual remittance.[8][9]

Features

Participants

CIPS participants are divided into two types: direct participant and indirect participant. Direct participants open an account in the CIPS, directly send and receive messages through the CIPS, while indirect participants have indirect access to services provided by the CIPS through direct participants.

As of February 2022, CIPS has 1304 participants with 76 as direct participants and 1228 as indirect participants.

Among indirect participants, 936 participants are from Asia (including 540 from Chinese Mainland), 164 from Europe, 43 from Africa, 29 from North America, 23 from Oceania, and 17 from South America, covering 104 countries and regions around the world.[10]

Standard Transceiver

Based on the message scheme of ISO20022 and compatible with the current CIPS standards, CIPS Standard Transceiver is the information exchange component between CIPS Direct/Indirect Participants and their institutional clients, and the application carrier of CIPS Standard.[11]

See also

References

  1. ^ a b c Reuters (2022-02-28). "Factbox: What is China's onshore yuan clearing and settlement system CIPS?". Reuters. Retrieved 2022-03-03.
  2. ^ a b c "What is China's Swift equivalent and what are its origins?". South China Morning Post. 2022-02-28. Retrieved 2022-03-03.
  3. ^ "SWIFT offers secure financial messaging services to CIPS".
  4. ^ "SWIFT joins CIPS in Shanghai for a roundtable on financial market infrastructures".
  5. ^ "CIPS membership information now published on SWIFTRef".
  6. ^ "ISO Maintenance agencies and registration authorities]".
  7. ^ "RFC 3615 – A Uniform Resource Name (URN) Namespace for SWIFT Fin".
  8. ^ "RMB Cross-Border Interbank Payment System".
  9. ^ "CIPS (Phase I)".
  10. ^ "CIPS Participants".
  11. ^ "CIPS Standard Transceiver".