Society for Worldwide Interbank Financial Telecommunication (SWIFT) supplies secure messaging services and interface software to wholesale financial entities. SWIFT’s messaging services are trusted and used by more than 11,000 financial institutions in more than 200 countries and territories around the world. Providing reliable, secure and efficient messaging services to our community of users, SWIFT is the backbone of global financial communication.
SWIFT and CIPS sign Memorandum Of Understanding (MOU) on cross-border interbank payment system cooperation
Brussels, 25 March 2016 – SWIFT has signed a memorandum of understanding (MOU) with China International Payment Service Corp., (CIPS Co.).
The MOU sets out plans for a strategic collaboration to develop China’s Cross-border Interbank Payment System (CIPS) using SWIFT as the secure, efficient and reliable channel to connect CIPS with SWIFT’s global user community. SWIFT Chief Executive of Asia Pacific and EMEA, Alain Raes and CIPS Executive Director, Li Wei signed the MOU in Beijing on 25th March 2016.
“China International Payment Service Corp. is looking forward to benefitting from SWIFT’s platform and services to provide an efficient and convenient channel to the global financial community. We aim to provide an inclusive platform to capture cross-border RMB flows to all types of participants which will significantly extend the reach of RMB internationalisation”, Li said.
Raes said, “SWIFT is a global messaging provider supporting more than 150 payment and settlement systems, and CIPS is a payment system. There are natural synergies between global financial messaging services, such those provided by SWIFT, and payment systems. Working with such market infrastructures is at the heart of our business”.
SWIFT is a member-owned cooperative with more than 11,000 financial institutions in more than 200 countries. To attain RMB internationalisation worldwide requires the global reach and connectedness of a network such as SWIFT’s. To date, 1,700 financial institutions have made RMB transactions using the SWIFT network. SWIFT has operated in China for over 30 years and nearly 400 Chinese financial institutions and corporations are connected to SWIFT today.
About China International Payment Service Corp.
China International Payment Service Corp. is a clearing institution established within the territory of the People’s Republic of China, which is approved by People’s Bank of China (PBC) and subjected to PBC’s supervision. China International Payment Service Corp is responsible for the operations and maintenance of CIPS, including the management of its participants and business promotions etc.
SWIFT is a global member-owned cooperative and the world’s leading provider of secure financial messaging services.
We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and financial crime compliance.
Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories, enabling them to communicate securely and exchange standardised financial messages in a reliable way. As their trusted provider, we facilitate global and local financial flows, support trade and commerce all around the world; we relentlessly pursue operational excellence and continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies.
Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.
CIPS seeks greater share of cross-border Yuan payments
China’s cross-border Yuan payment system is improving its security and messaging standards in an attempt to become a mainstream platform for clearing and settling cross-border Yuan payment.
Widely known as CIPS, the system currently processes cross-border Renminbi payments for trade, direct investment, financing and personal remittance. Prior to the launch of CIPS last year, most such payments were processed either through designated offshore clearing banks or correspondent banks.
While CIPS has proven more efficient, the volume of payments it handles trails other channels due to its functional limits. For example, current operating hours leave the Americas uncovered.
Li Wei, executive director of China International Payment Service Corp.which operates CIPS, said on Friday that the payment system is working with SWIFT to make MT messaging standards, widely used in cross-border banking transactions, compatible with the ISO20022 standards used by CIPS, through a conversion scheme.
CIPS had 19 directly participating banks and another 176 banks indirectly involved when it was launched in October. Indirect participants have grown to 253 since then, but the increase is small when compared with overall growth of the Chinese currency in global payments, according to Zhang Xin, general manager of CIPS.
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. An extension of operating hours to handle transactions with the Americas is under consideration.
To ensure secure operation on CIPS, SWIFT is also working with banks engaged in cross-border payments to improve automated processing and reduce operational risks, according to Daphne Huang, SWIFT head in China.
CIPS is also building a back-up system to ensure smooth operations in case of transactions in Shanghai being unexpectedly disrupted.
Li 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.
Procedures for Foreign Central Banks and Similar Institutions to Enter China’s Inter-bank Bond Market
Fees：Relevant institutions should pay transaction fees to the China Foreign Exchange Trade System & National Inter-bank Funding Center (hereinafter referred to as the CFETS), and service fees to China Central Depository & Clearing Co. Ltd. (hereinafter referred to as the CCDC) and Shanghai Clearing House (hereinafter referred to as the SHCH) respectively. Meanwhile, commission may be charged by the agents.
1.5 Investment and Settlement
1.5.3 Sending transaction note：Upon completion of a transaction, the PBC shall send the transaction note issued by the CFETS as the transaction contract to relevant institutions by SWIFT message, e-mail or any other means as agreed by two parties on the same day.