View source for Cross-Border Interbank Payment System

The '''Cross-Border Interbank Payment System''' ('''CIPS''') is a financial-market infrastructure that provides clearing and settlement services for cross-border [[Renminbi|renminbi]] (RMB) payments.

CIPS was established in China to facilitate international RMB transactions and to provide participating financial institutions with standardized cross-border payment and settlement services.

A simplified representation is:

<math>
\mathrm{Cross\!-\!Border\ Payment}
\rightarrow
\mathrm{CIPS}
\rightarrow
\mathrm{Clearing\ and\ Settlement}
\rightarrow
\mathrm{Recipient}
</math>

==Purpose==

CIPS supports the international use of the renminbi by providing infrastructure for cross-border RMB payments.

Its functions include:

* processing cross-border RMB payments;
* providing clearing and settlement services;
* connecting participating financial institutions;
* supporting standardized payment messaging and processing;
* facilitating international RMB transactions.

A simplified relationship is:

<math>
\mathrm{International\ RMB\ Transaction}
\rightarrow
\mathrm{CIPS}
\rightarrow
\mathrm{Payment\ Processing}
\rightarrow
\mathrm{Settlement}
</math>

==Establishment==

CIPS was developed by the [[People's Bank of China]] as part of efforts to improve China's cross-border RMB payment infrastructure.

The system began operations in 2015.

Its development formed part of the broader internationalization of the renminbi and the development of China's financial-market infrastructure.

A simplified progression is:

<math>
\mathrm{RMB\ Internationalization}
\rightarrow
\mathrm{Cross\!-\!Border\ Payment\ Infrastructure}
\rightarrow
\mathrm{CIPS}
</math>

==Participants==

CIPS connects participating banks and other eligible financial institutions involved in cross-border RMB transactions.

Participants can access the system either directly or through arrangements involving other participating institutions, depending on the applicable participation framework.

A simplified structure is:

<math>
\mathrm{Bank\ A}
\rightarrow
\mathrm{CIPS}
\rightarrow
\mathrm{Bank\ B}
</math>

The network can connect institutions in China with financial institutions operating in other jurisdictions.

==Payment processing==

CIPS processes payment instructions associated with cross-border RMB transactions.

A simplified payment sequence is:

<math>
\mathrm{Payment\ Instruction}
\rightarrow
\mathrm{Verification}
\rightarrow
\mathrm{Clearing}
\rightarrow
\mathrm{Settlement}
</math>

The precise processing sequence depends on the type of transaction and the relevant institutional arrangements.

==Renminbi internationalization==

CIPS forms part of China's infrastructure for supporting the international use of the renminbi.

International RMB use can involve:

* trade settlement;
* cross-border investment;
* financial-market transactions;
* international lending;
* other cross-border financial activities.

A simplified relationship is:

<math>
\mathrm{International\ RMB\ Use}
\rightarrow
\mathrm{Cross-Border\ Payment\ Demand}
\rightarrow
\mathrm{CIPS}
\rightarrow
\mathrm{RMB\ Settlement}
</math>

CIPS does not itself determine the international value or exchange rate of the renminbi.

==Relationship with SWIFT==

CIPS and the [[Society for Worldwide Interbank Financial Telecommunication]] (SWIFT) perform different functions.

CIPS is a payment and settlement infrastructure for cross-border RMB transactions, whereas SWIFT primarily provides a standardized financial messaging network used by financial institutions to exchange payment and other financial messages.

A simplified distinction is:

<math>
\mathrm{CIPS}
\rightarrow
\mathrm{Payment\ and\ Settlement\ Infrastructure}
</math>

<math>
\mathrm{SWIFT}
\rightarrow
\mathrm{Financial\ Messaging\ Infrastructure}
</math>

The two systems can interact, and participation in CIPS does not necessarily eliminate the use of SWIFT messaging.

==Financial infrastructure==

CIPS is part of China's broader financial-market infrastructure.

Its operation involves participating financial institutions, payment systems, financial messaging, clearing arrangements, and settlement processes.

A simplified representation is:

<math>
\mathrm{Financial\ Institution}
\rightarrow
\mathrm{Payment\ Instruction}
\rightarrow
\mathrm{CIPS}
\rightarrow
\mathrm{Settlement}
</math>

The system operates within the regulatory and institutional framework established by Chinese financial authorities.

==International role==

CIPS has expanded the infrastructure available for cross-border RMB transactions as the international use of the currency has increased.

Its international network can facilitate RMB payments involving institutions in multiple jurisdictions.

A simplified relationship is:

<math>
\mathrm{Global\ RMB\ Transactions}
\rightarrow
\mathrm{CIPS\ Network}
\rightarrow
\mathrm{Cross\!-\!Border\ Settlement}
</math>

The international role of CIPS is therefore closely associated with the development of the renminbi as an international payment and settlement currency.

==See also==

* [[Renminbi]]
* [[People's Bank of China]]
* [[Society for Worldwide Interbank Financial Telecommunication]]
* [[Cross-border payment]]
* [[Interbank network]]
* [[Payment system]]
* [[Clearing (finance)]]
* [[Settlement (finance)]]
* [[Internationalization of the renminbi]]

[[Category:Payment systems]]
[[Category:Financial infrastructure]]
[[Category:Banking in China]]
[[Category:International finance]]
[[Category:Renminbi]]