China launched the first phase of China International Payment System

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Who: First phase of China International Payment System
Where: China
What: Launched by China
When: 8 October 2015

China on 8 October 2015 launched the first phase of China International Payment System (CIPS), a milestone in bolstering Yuan’s global usage and furthering cross-border clearing of its currency from the Chinese mainland instead of offshore centres abroad.

The launch of the CIPS was expected to boost the Shanghai Free Trade Zone (FTZ) launched in 2013 as a test bed for new reforms.

About China International Payment System (CIPS)
• Developed and administered by the People’s Bank of China, CIPS enables market participants outside China to clear Yuan transactions with their Chinese counterparts directly from 9 am to 8 pm.
• The CIPS provides capital settlement and clearing services for cross-border Yuan transactions for financial institutions domestically and abroad.
• It will enhance efficiency and increase global use of the Chinese currency.
• CIPS will help shore up China’s real economy and promoting the going abroad strategy of domestic enterprises.

Background
China has encouraged global use of the Yuan in recent years. The central bank designated 10 official Yuan clearing banks in 2014, bringing the total to 14 globally that can clear Yuan transactions with China.

Previously, cross-border Yuan clearing was done either through one of the offshore Yuan clearing banks in places like Hong Kong, Singapore and London, or else with the help of a corresponding bank on the Chinese mainland.

China’s Yuan at present is the world’s fourth most-used payment currency overtaking Japan’s Yen in September 2015, according to global transaction services organisation SWIFT.