The giant Citic Securities, the first Chinese merchant bank, is the first Beijing institution to come out: China must expand the development of the Cips system, an alternative to Swift, in cross-border payments and in the digital yuan, after Western nations have used the Swift system as a tool to sanction Russia, one of Beijing’s main partners. Cips settles and settles international credits in yuan, leveraging the Belt and Road Initiative (BRI), regional global economic partnership trade and other international cooperation agreements.
I tools strategici
The analysis is by Citic Securities head of fixed income research, Ming Ming, according to which “the digital yuan, currently being tested and intended primarily for domestic retail use, could potentially be used for commercial deals and this it would be independent of the Swift system ».
Of course, Chinese financial institutions will be cautious in providing financial services to Russian companies and individuals and avoid falling into the sanctions trap themselves, but technically the move is possible. Politically it should be supported because promoting Cips “could push forward the internationalization of the yuan and reduce to some extent the dependence of China and its partners on the Swift system”.
Countries including the United States have decided to exclude some Russian banks from the Swift messaging system operated by the Society for Worldwide Interbank Financial Telecommunication, an essential platform for global cross-border transactions worth trillions of dollars.
The alternative side
Affected by the blockade of Swift transfers, Russia will not remain entirely unmanned in terms of payments abroad. The financial system will be able to make international payments thanks to the Cips, the alternative Chinese channel based on the renminbi (or yuan), the currency of the Chinese people.