China’s CIPS aims to become mainstream platform
(29 March 2016 – China) China's cross-border yuan payment system, better known as CIPS, is improving its security and messaging standards in an attempt to become a mainstream platform for clearing and settling cross-border yuan payment.
Launched in 2015, the system has proven more efficient, however the volume of payments it handles trails other channels due to its functional limits.
Li Wei, executive director of China International Payment Service Corp. which operates CIPS, said last week that the payment system is working with SWIFT to make MT messaging standards, widely used in cross-border banking transactions, compatible with the standards used by CIPS, through a conversion scheme.
CIPS had 19 directly participating banks and another 176 banks indirectly involved when it was launched. Indirect participants have grown to 253 since then.
Another dozen banks are expected to become direct participants by the end of this year and the system will be connected to the bond and foreign exchange markets.
The head of SWIFT in China, Daphne Huang, has indicated that to ensure secure operation on CIPS, it is also working with banks engaged in cross-border payments to improve automated processing and reduce operational risks.
Wei expects CIPS to evolve into a more secure and efficient system with expanded time zone coverage and take a greater share in handling cross-border yuan payments, though offshore clearing banks and correspondent banks will continue to be used.
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