HSBC has become one of the first banks to be connected to China’s Cross-border Interbank Payment System (“CIPS”), a centralised clearing platform for cross-border renminbi (“RMB”) transactions. As a direct participant, HSBC China has started processing cross-border RMB transactions for its global clients through the new system, which officially launched today.
CIPS adopts an international standard messaging format and serves as a platform that centralises the processing of cross-border RMB payment transactions. The new system enhances the payment process, providing an optimal option among different clearing channels with varying messaging formats.
The introduction of CIPS is expected to be a catalyst for growing cross-border transaction volumes in RMB, which is now the world’s fourth-most active payment currency and the second-most used currency in trade finance. HSBC expects more than half of China’s global trade to be settled in RMB by 2020.
Helen Wong, HSBC Greater China Chief Executive, said: “The establishment of CIPS is an important milestone in RMB internationalisation, providing the infrastructure that will connect global RMB users through one single system.”
“Because of the fast growth of cross-border RMB businesses, there is increasing demand for an international RMB clearing platform that adopts global market standards and offers efficiency in terms of trading time and language as well as risk and liquidity management. We believe CIPS will meet that demand, boosting RMB use worldwide and paving the way for China’s currency to become truly global.”
In addition to the Bank’s mainland China unit, HSBC Hong Kong will also participate in CIPS as an “indirect participant,” connecting to the RMB system via HSBC China.
Commenting on this, Ms. Wong said: “An improved RMB settlement infrastructure will support more efficient RMB payments in offshore markets, which should in turn translate into stronger demand for RMB products internationally. As the leading offshore RMB centre, Hong Kong is ideally positioned to benefit from growth in global RMB transactions. We expect the Hong Kong RMB real-time gross settlement system to work hand-in-hand with CIPS to further grow the RMB market in Hong Kong, generating higher volumes of foreign exchange, debt issuance and transactions in other financial instruments.”
HSBC has been a champion of RMB internationalisation since the beginning of this historic process. The Bank has established RMB trade and payment capabilities in over 50 markets globally, was the first international bank to settle RMB trade in six continents, and continues to be at the forefront of market developments within and beyond mainland China.