Geopolitical crisis in Ukraine exposed many problems, including economic ones. Total dependence of most financial transfers on the SWIFT payment system is one of the key issues. SWIFT is a Brussels-based global banking transaction processing utility controlled by the United States.
Every time new sanctions against Russia were discussed, Western politicians permanently threatened to disconnect Russia from SWIFT. However, the system’s representatives said they had no intention to do that. Considering such scenario, the Russian government ordered to create its own national payment system. Today, 91 Russia's credit institutions have been incorporated into a newly launched Russian domestic analogue of SWIFT.
China has decided to follow the example of Russia before possible sanctions strike it. Thus, it announced that the China International Payment System (CIPS) fully complies with standards and is due to be launched in September or October. Currently, there is a patchwork of multiple clearing houses that process renminbi payments, thus making the process more complicated and time-consuming.
The launch of the CIPS will remove existing hurdles to internationalizing the yuan and will greatly boost the global use of the Chinese currency.
Commenting on the measures China is taking, experts say that the system could be launched in 2015 but it is most likely that it will come on stream in 2016.
However, there is little doubt that sooner or later the CIPS will gain recognition in the financial world. Last autumn, the yuan was among the top five most-used currencies in the SWIFT system, regardless of difficulties associated with different languages and codes. A single platform will significantly increase the popularity of the Chinese currency.
