Home Business Opponent: Zhou Xiaochuan points out that RMB CIPS is difficult to replace SWIFT, urges not to make international payment system a cold war

Opponent: Zhou Xiaochuan points out that RMB CIPS is difficult to replace SWIFT, urges not to make international payment system a cold war

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Opponent: Zhou Xiaochuan points out that RMB CIPS is difficult to replace SWIFT, urges not to make international payment system a cold war

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When Russia was hit with international financial sanctions for its invasion of Ukraine, China has occasionally made remarks about accelerating the digitization of the yuan and replacing the Society for Worldwide Interbank Financial Telecommunication (SWIFT) with the yuan cross-border payment system (CIPS). A forum pointed out that the digital renminbi is based on retail sales. Even if it can be used for cross-border payments, it is difficult to replace SWIFT, and it cannot be easily used as a military weapon; however, if SWIFT is used in large quantities as a sanction tool, it will make the sanctioned party. Try to find alternative communication channels to complete the trade, but this will require a transition period.

Zhou Xiaochuan, the president of the China Society for Finance and Banking and the longest-serving former president of the People’s Bank of China, pointed out at the opening ceremony of the “2022 Tsinghua PBCSF Global Financial Forum” on the 16th that due to geopolitical instability, some people are concerned about the digitization of RMB in the international settlement communication system SWIFT. And the RMB cross-border payment system CIPS works, and “some actions have been taken”. He did not disclose the details of these actions, but his remarks are different from the keynote that China can make a sound. Zhou Xiaochuan pointed out that SWIFT is a cross-border payment communication system, and clearing is carried out in different countries’ systems; and CIPS is designed in It is a system for RMB cross-border payment, settlement and settlement. Although there are a few mainstream currencies, the amount of payment is very small. In addition, some communication functions are integrated into the system, but they are not used much. Since CIPS is not a payment communication system To design, “it is unlikely to hold up”.

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He continued that the SWIFT system plays a very important role in trade. First, SWIFT has a large number of participating financial institutions. Second, SWIFT has done a good job in encrypting its own messages. Many messages are processed automatically without human intervention. It is widely used in trade and has formed efficiency and market size. However, he added that SWIFT is not irreplaceable, it just needs a lot of things to replace SWIFT, and there is a transition period; once there is such a mechanism to avoid SWIFT, it is expected that the number of institutions participating in the initial stage may be small, and many communications will be difficult to achieve. It will affect the efficiency of trade, and there will be concerns about security.

As for CIPS, Zhou Xiaochuan said that the digital renminbi is designed for retail, to facilitate consumption by people and merchants, not to replace the US dollar. Although it cannot be ruled out that the digital renminbi may have the prospect of cross-border payment in the future, it is expected to focus on cross-border retail. Application, not easily can be used as a military weapon.

Looking at the information, China has been piloting the digital renminbi since last year, and it has been piloted in Shanghai, Shenzhen, Guangzhou, Zhejiang, Suzhou, Chongqing, Tianjin and other places, and is also studying the implementation of the digital renminbi in Hong Kong.

Zhou Xiaochuan reiterated that it is necessary to avoid letting the payment system or payment communication system slip into the Cold War pattern, otherwise everyone will suffer losses.

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