What is Cross-Border Interbank Payments System (CIPS) ? International Payment Systems

The Cross-Border Interbank Payments System (CIPS) is a Chinese payment system launched in 2015 by the People’s Bank of China (PBOC). Here’s a breakdown of CIPS:

• Purpose: Facilitate cross-border transactions in Renminbi (RMB), China’s currency. This aims to internationalize the use of RMB and reduce reliance on other currencies like USD.
• Services: Provides clearing and settlement services for RMB payments related to trade in goods and services, direct investment, financing, and individual remittances.
• Structure: Real-time gross settlement system (RTGS) where payments are settled immediately.
• Participants: Primarily direct participants (mostly from mainland China) with accounts at CIPS, and indirect participants who access it through direct participants.

Other International Payment Systems:

• SWIFT (Society for Worldwide Interbank Financial Telecommunication): Dominant global messaging network used for international financial transactions. It acts as a secure communication channel, not a settlement system. Currencies can be diverse.
• CHIPS (Clearing House Interbank Payments System): US-based RTGS system for clearing and settling USD-denominated interbank transactions.
• TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer system): Pan-European RTGS system for settling payments in Euro.
• SEPA (Single Euro Payments Area): European initiative to simplify cross-border payments in Euro within the Eurozone.