By early 2023, China's Cross-Border Interbank Payment System (CIPS) had grown to over 100 direct participants and more than 1,300 indirect participants across approximately 100 countries. This analysis examines the growth trajectory of the system from its 2015 launch and its role in the evolving geopolitical landscape of cross-border payments.
From Launch to Scale
CIPS launched in October 2015 with 19 direct participants, primarily large Chinese banks and a handful of international institutions. The system was designed to support cross-border RMB transactions, providing clearing and settlement services for both payment and trade finance messages.
In its early years, CIPS grew steadily but modestly. The system processed approximately RMB 26 trillion in 2019, a small fraction of SWIFT's overall volume. Growth was driven primarily by expanding trade settlement in RMB and China's Belt and Road Initiative financing.
Acceleration Post-2022
CIPS growth accelerated significantly after 2022, driven by geopolitical factors. Western sanctions on Russia following the invasion of Ukraine demonstrated the risks of dependence on dollar-denominated correspondent banking infrastructure. Countries and institutions seeking to diversify their cross-border payment options showed increased interest in CIPS as an alternative channel.
By 2023, CIPS daily processing volumes had grown substantially. The system added direct participants from Russia, the Middle East, Southeast Asia, and Africa at an accelerated pace.
Technical Characteristics
CIPS operates with extended hours (05:00-01:00 Beijing time, covering European and Asian business hours) and supports both customer and financial institution transfers. Messages follow a format based on ISO 20022, though CIPS also maintains its own message specifications.
CIPS provides an alternative to routing RMB payments through SWIFT and US dollar clearing. While most cross-border RMB payments still involve SWIFT messaging at some point in the chain, CIPS direct connections allow bilateral settlement without SWIFT involvement.
Geopolitical Context
CIPS exists at the intersection of financial infrastructure and geopolitics. It serves a legitimate function as the clearing system for the world's second-largest economy's currency. At the same time, its growth trajectory and participant expansion are closely watched by Western policymakers as an indicator of financial system bifurcation.
The system's expansion does not necessarily represent a challenge to the dollar-based system. Most CIPS transactions are trade-related RMB flows that would occur regardless of the payment channel. But the option of an alternative infrastructure reduces the leverage that dollar-based sanctions and compliance requirements provide.
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