China’s long-awaited international payment system to process cross-border yuan transactions is ready and could launch by year-end, Reuters reports, citing sources with direct knowledge of the matter.
The launch of the China International Payment System (CIPS) will open the way for the yuan to go international and increase its global usage by cutting transaction costs and processing times.
“The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks,” said a senior banking source who is involved in the matter.
“The official launch will be in September or October, depending on the results of the testing and preparation,” the source added.
A second source said authorities want to launch the first phase of CIPS before December.
The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through.
The Chinese yuan has become the world’s fifth most used payment currency, data from the SWIFT banking transaction network showed recently.
“The RMB breaking into the top five world payments currencies is an important milestone,” Wim Raymaekers, Head of Banking Markets at SWIFT said in statement then.
The renminbi (RMB) is the official name of the Chinese currency, while the yuan is the basic unit of the renminbi.
China’s currency has been outrunning both the Canadian and Australian dollars since November, according to the SWIFT statement. In January 2013 it was ranked 13th.
The renminbi was used in 2.17 percent of world’s transactions in December, the SWIFT data revealed.
