CIPS - Cross-border interbank payment system

2023: Connecting 30 Russian banks

About 30 Russian banks joined CIPS (Cross-Border Interbank Payment System). Roman Chernov, executive director of the Russian National Association of Financial Communications Participants (Rosfinkom, the former Russian National Association SWIFT), spoke about this at the end of May 2023.

As Vedomosti clarifies, Russian credit organizations connect to the national Chinese bank transfer system mainly as indirect participants, and not direct ones. Direct participants open an account with CIPS, send and receive messages through the system (indirect ones have access through direct ones), open accounts directly with CIPS (indirect ones through correspondent banks), the newspaper explains.

About 30 Russian banks connected to the Chinese analogue of SWIFT

According to the system rules, the status of direct participant is assigned only to residents China and their subsidiaries. The only bank connected to the Chinese system directly is the Russian subsidiary of the largest Chinese, "a Aisibisi Bank source in one of the largest banks in the Russian Federation told the publication. According to Vedomosti, by May 26, 2023, the only bank connected to CIPS directly is the Russian subsidiary of the largest Chinese iCBI Bank.

It is noted that the rest of those wishing to become indirect participants in the system will have to wait, since by May 2023 it cannot cope with the flow of applications. In particular, some credit institutions have been waiting for their application to be approved for several months. Due to the technical and legal subtleties that require, including the configuration of the bank's internal systems, the connection can last up to a year. Bank representatives add that connecting to CIPS is a rather complex process that requires not only signing the relevant documents, but also setting up the bank's internal systems.^[1]

2022: Russian banks switch to CIPS

On July 12, 2022, it became known that a number of Russian banks began integration with the Chinese analogue of SWIFT - the CIPS system, Vedomosti writes, citing its sources and representatives of financial organizations. Rosbank plans a full connection in the third quarter of 2022, Gazprombank is working on a connection as a direct participant and is already interacting with the system.

Meanwhile, 23 Russian banks have already joined the system for July 2022, including Otkritie FC, Credit Bank of Moscow (MKB), Asia-Pacific Bank, Transcapitalbank, Solidarity Bank, Ak Bars, Absolut Bank and St. Petersburg Bank (BSPB). Moreover, some financial organizations began integration with the payment system of the PRC quite a long time ago, for example, FC Otkritie did this in 2016.

More recently, Bank St. Petersburg (BSPB) and Absolut Bank also began to "be friends" with the Chinese system. The second carried out integration on June 2, 2022 through its correspondent bank for settlements in yuan "Aisibisi Bank."

In Absolut Bank, over the past three to four months, the number of operations in yuan has grown, which was influenced by the connection to CIPS, Sergei Mikhailov, director of the investment and trade department of Absolut Bank, told Vedomosti. Processing of payments in yuan by correspondent banks is accelerated, the compliance load is reduced, and commission costs are reduced. The bank's customers use CIPS for foreign economic activity and settlements in Chinese currency.

The representative of Solidarity Bank said that the organization has been participating in CIPS since 2019 - and the volume of settlements in national currencies shows steady growth as of the second quarter of 2022. Among the advantages of connection are access to all Chinese banks operating in CIPS, inexpensive cost of using the system and high settlement speed.

In the summer of 2021, Olga Skorobogatova, First Deputy Chairman of the Central Bank, announced the possibility of integrating CIPS with the SPFS (Financial Messaging System), which was created by the Central Bank. She claimed that there is a technical possibility to combine the SPFS and the Chinese bank transfer system through the gateway. However, the unification has not yet happened.

If CIPS is integrated with the SPFS and with other national counterparts of other countries, such a "web" would be interesting and could resist SWIFT, from which the sanctions banks were cut off - this opinion was expressed to Vedomosti by the chairman of the board of the National Payments Council Alma Obaeva.

2020: China's Central Bank prepares the country's banks for disconnection from SWIFT

China's banks should prepare for possible sanctions from the United States and disconnection from SWIFT, according to the report of the investment division of the Central Bank of China.

To do this, Chinese credit institutions are advised to increase the use of their own financial messaging system in cross-border transactions in mainland China, Hong Kong and Macau.

Chinese state-owned banks have long been developing an action plan in case the US Congress imposes sanctions against them for working with officials of the Middle Kingdom, who are associated with the development of a national security law in Hong Kong.

The more active use of the Chinese Cross-Border Interbank Payment System (CIPS) instead of the Belgian SWIFT will also restrict the access of the US authorities to data on international financial transactions in China, according to the report of the Central Bank of the country of China.

"A good strike on the enemy will spare you hundreds of retaliatory strikes," the Bank of China said in a report. - "We must prepare in advance: both morally and practically."

2015: System Launch

The CIPS cross-border interbank payment system was launched PEOPLE'S REPUBLIC OF CHINA in 2015 and received authorization. People's Bank of China CIPS is headquartered in. Shanghai The platform specializes in cross-border clearing of payments in yuan, the organization's mission is to develop the global use of the Chinese currency.

CIPS participants are divided into direct and indirect. Direct opens an account in CIPS, directly sends and receives messages through the system. Indirect have indirect access to services through direct participants. The former open accounts with CIPS, the latter through correspondent banks. As the director of the investment and trade department of Absolut Bank Sergei Mikhailov clarified, the status of a direct participant is assigned only to residents of the PRC and their "daughters."

CIPS is often called an analogue, SWIFT but the Chinese system is intended for settlements in yuan. SWIFT only helps banks from different banks countries to transmit messages to each other for transactions. An expert in the field of financial technologies and electronic payments, Alexander Voskoboinikov, in an interview CNews with explained that comparing these two systems is not entirely correct - one in fact, state the other not.

Notes