New | China's global payment system for yuan sees limited launch
Beijing's cross-border clearing scheme startswith limited hours, and only for select banks
China's international payment system for yuan went online on Thursday in a watered down, soft-launch version that did not meet early market expectations.
Previously dubbed the China International Payment System, the People's Bank of China formally christened the system as the Cross-Border Inter-Bank Payment System (CIPS). It will operate out of Shanghai for 11 hours a day, instead of the 24-hour, open-to-all system that had been hoped for, which would have allowed global players to access the Chinese onshore market directly. Only 19 banks qualified under the first phase of CIPS.
The qualifying banks are 11 Chinese banks and eight international banks. The Chinese banks are Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Hua Xia Bank, Minsheng Bank, China Merchants Bank, Industrial Bank, Ping An Bank and Shanghai Pudong Development Bank. HSBC, Citi, Standard Chartered, DBS, Deutsche Bank, BNP Paribas, ANZ and Bank of East Asia make up the international list.
The operation will run between 9am and 8pm local time each day, covering the clearing needs of institutions operating between the Asia-Pacific and European time zones. However, American trading hours will not be catered to at this time.
It will accept payments related to cross-border trade, direct investments, financing and personal remittances. The system's architectural framework and the level of clearing fees CIPS will charge have not been disclosed, and so cannot be compared with the existing designated clearing bank structure, under which China's state-owned banks currently enjoy monopolies in various global markets.
Kee Joo Wong, the head of global payments and cash management at HSBC Asia-Pacific, said it was "the start of a journey".
