The China International Payment System (CIPS) is set to be reduced significantly in size, with the platform now being used only for cross-border yuan trade deals, rather than capital-related transactions.
The Chinese Central Bank intended for CIPS to offer a global platform for yuan transaction, fixing technical issues such as language and offering 24-hour settlement to boost worldwide use of the currency.
The main aim of CIPS was for it to boost the yuan as an international currency for settling trade.
The cross-border payments system is currently scheduled for a September or October release, with industry insiders expecting the network to provide competition for international transfer network SWIFT. With this latest development, CIPS isn’t expected to be released until 2016 at the earliest.
According to Reuters, CIPS will now offer a ‘‘complementary network for settling trade-related deals in the Chinese currency to a current patchwork of Chinese clearing banks dotted around the world.’’
This latest change to CIPS will delay billions worth of transactions, including Foreign Direct Investment (FDI). Sources close to the situation spoke to Reuters on the 13th July, explaining that the system isn’t ready for release yet.
‘‘I think ambition stood before ability,’’ commented one of the individuals who is directly involved in the implementation of the project. ‘‘It doesn’t include a lot of things, but there is pressure for delivery.’’
This is not the first time that CIPS has encountered problems with its launch. In April, an IMF survey revealed that the payments system is endangering itself of losing valuable international business.
Some 74 per cent of the 150 businesses surveyed said that a delay in the start of CIPS is a major obstacle to their use of cross-border yuan transactions.
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