The Cross-Border Interbank Payment System (CIPS) is a payment system which offers clearing and

settlement Settlement may refer to: *Human settlement, a community where people live *Settlement (structural), the distortion or disruption of parts of a building * Closing (real estate), the final step in executing a real estate transaction *Settlement (fin ...

services for its participants in cross-border

RMB The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...

payments and trade. Backed by the

People's Bank of China The People's Bank of China (officially PBC or informally PBOC; ) is the central bank of the People's Republic of China, responsible for carrying out monetary policy and regulation of financial institutions in mainland China, as determined by ...

(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 The Bank of East Asia Limited, often abbreviated to BEA, is a Hong Kong banking and financial services company, headquartered in Central, Hong Kong. It is currently the largest independent local Hong Kong bank, and one of two remaining family ...

DBS Bank DBS Bank Limited, often known as DBS, is a Singaporean multinational banking and financial services corporation headquartered at the Marina Bay Financial Centre in the Marina Bay district of Singapore. The bank was previously known as The De ...

Citi Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomer ...

Australia and New Zealand Banking Group The Australia and New Zealand Banking Group Limited (ANZ) is an Australian multinational banking and financial services company headquartered in Melbourne, Victoria. It is Australia's second-largest bank by assets and fourth-largest bank by ma ...

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.

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 Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a claim ...

(SDR). March 2016,

SWIFT Swift or SWIFT most commonly refers to: * SWIFT, an international organization facilitating transactions between banks ** SWIFT code * Swift (programming language) * Swift (bird), a family of birds It may also refer to: Organizations * 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. September 2017, As one of MOU plan signed between

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 IBAN or Iban or Ibán may refer to: Banking * International Bank Account Number Ethnology * Iban culture The Ibans or Sea Dayaks are a branch of the Dayak people, Dayak people on the island of Borneo in Southeast Asia. It is believed that the ...

data, standing settlement instructions, credit ratings, as well as financial institutions’ memberships to domestic and cross-border payment market infrastructures. 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 Delivery versus payment or DvP is a common form of settlement for securities. The process involves the simultaneous delivery of all documents necessary to give effect to a transfer of securities in exchange for the receipt of the stipulated payment ...

(DVP) settlement and supported Northbound Trading of Bond Connect, which would reduce settlement risks and improve efficiency of cross-border bond transactions. 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.

Standards

CIPS uses the

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 Registration authorities exist for many standards organizations, such as ANNA (Association of National Numbering Agencies for ISIN), the Object Management Group, W3C, IEEE and others. In general, registration authorities all perform a similar fun ...

'' (RA) for the following

ISO ISO is the most common abbreviation for the International Organization for Standardization. ISO or Iso may also refer to: Business and finance * Iso (supermarket), a chain of Danish supermarkets incorporated into the SuperBest chain in 2007 * Iso ...

standards: *

ISO 9362 ISO 9362 is an international standard for Business Identifier Codes (BIC), a unique identifier for business institutions, approved by the International Organization for Standardization (ISO). BIC is also known as SWIFT-BIC, SWIFT ID, or SWIFT code, ...

: 1994 Banking—Banking telecommunication messages—Bank identifier codes * ISO 10383: 2003 Securities and related financial instruments—Codes for exchanges and market identification (MIC) *

ISO 13616 ISO is the most common abbreviation for the International Organization for Standardization. ISO or Iso may also refer to: Business and finance * Iso (supermarket), a chain of Danish supermarkets incorporated into the SuperBest chain in 2007 * Iso ...

: 2003

Registry *

ISO 15022 ISO 15022 is an ISO standard for securities messaging used in transactions between financial institutions. Participants in the financial industry need a common representation of the financial transactions they perform and this standard defines g ...

: 1999 Securities—Scheme for messages (Data Field Dictionary) (replaces ISO 7775) *

ISO 20022 ISO 20022 is an ISO standard for electronic data interchange between financial institutions. It describes a metadata repository containing descriptions of messages and business processes, and a maintenance process for the repository content. ...

-1: 2004 and ISO 20022-2:2007 Financial services—UNIversal Financial Industry message scheme In RFC 3615 ''urn:swift:'' was defined as

Uniform Resource Name A Uniform Resource Name (URN) is a Uniform Resource Identifier (URI) that uses the scheme. URNs are globally unique persistent identifiers assigned within defined namespaces so they will be available for a long period of time, even after the res ...

s (URNs) for SWIFT FIN.

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.

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 June 2022, CIPS has 1341 participants with 76 as Direct Participants and 1265 as Indirect Participants. Among indirect participants, 965 participants are from Asia (including 547 from Chinese Mainland), 185 from Europe, 46 from Africa, 29 from North America, 23 from Oceania, and 17 from South America, covering 106 countries and regions around the world.

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.

References