Update | China International Payment System (CIPS) said ready; may be launched September or October

China’s long-awaited international payment system to process cross-border yuan transactions is ready, and may be launched as early as September or October, three sources with direct knowledge of the matter told Reuters.

The launch of the China International Payment System (CIPS) will remove one of the biggest hurdles to internationalising the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.

It will also put the yuan on a more even footing with other major global currencies like the US dollar, as CIPS is expected to use the same messaging format as other international payment systems, making transactions smoother.

CIPS, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process.

"The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks," said a senior banking source who is involved in the matter.

The official launch will be in September or October, depending on the results of the testings and preparation, the source said.

A second source with direct knowledge of the matter said authorities want to launch the first phase of CIPS before December.