On Oct. 8, China initiated the first phase of their own SWIFT type platform that will soon allow nations throughout the world to have an alternative to the dollar and its functionality as the singular reserve currency. Known as the Cross-border Interbank Payment System (CIPS), this first phase of becoming a fully global platform will aid China in the multitude of free trade agreements China has signed in recent months, and it will also help facilitate the buying and selling of oil and natural gas in Yuan through agreements signed earlier this year with Russia.
SWIFT is the Western version of China’s new CIPS platform, and was put into place at the same time the dollar become the global reserve petro-dollar in 1973. Fully spelled out as the Society for the Worldwide Interbank Financial Telecommunication (SWIFT), this communication exchange has reigned as the primary platform for global currency transfers between countries in in the sale of commodities such as oil, natural gas, gold, and food stuffs.
The first phase of the Cross-border Interbank Payment System (CIPS) was launched on Thursday in Shanghai, promoting the global use of the Chinese currency.
“CIPS is an important milestone in the internationalization of the yuan,” said Fan Yifei, deputy governor of the People’s Bank of China, the central bank.
The system, which provides capital settlement and clearing services for cross-border yuan transactions for financial institutions, will boost the global use of the yuan, or renminbi (RMB), by cutting costs and processing times, he said.
The worldwide “payment superhighway”, will accelerate the internationalization of the RMB, said Hu Xiaolian, president of the Export-Import Bank of China.
Nineteen banks have been named direct participants of CIPS, including four major Chinese banks, and HSBC Bank (China), Citibank China and Standard Chartered China, all of which are allowed to open accounts with CIPS and receive services directly.
In addition, 38 Chinese banks and 138 foreign financial institutions have been approved as indirect participants. They are entitled to CIPS services indirectly through one or more of the direct participants. – En.People.CN
Rumors of a new Chinese SWIFT equivalent had been floating around for more than six months, but with the United States finalizing agreements for the Trans-Pacific Partnership (TPP) over the weekend, this direct competition to the reserve currency and to dollar hegemony in the global financial system will cut short many of the objectives Washington wanted to control through their new trade treaty. For example, of the 12 nations signed on for TPP, five of them currently have separate free trade agreements with China, and each will soon be using the Yuan, not the dollar, for a large portion of their direct trade.
Just as the Asian Infrastructure and Investment Bank (AIIB), the direct selling of oil in Yuan, and the formation of the Silk Road have bitten into America’s control over the world’s monetary system, so too will CIPS fulfill an even greater role in ending dollar hegemony and the use of a singular reserve currency in global trade. And with China signing new swap lines and bond trading agreements with nations almost monthly now, it will not be long until 40% or more of the world trades in Yuan instead of dollars, and the battle will be on for the world to choose either un-sanitized free trade, or Western led restricted ‘free trade’.