China’s Cross-border Interbank Payment System / China International Payments System, CIPS can become an alternative to SWIFT for banks connected to it, Viktor Dostov, President of the Russian Electronic Money and Remittance Association, told TASS.
   
According to him, with the growth of settlements in yuan, the potential for connecting Russian banks to CIPS is going to increase, and if other currencies are introduced into it, the system can also be used for settlements in rubles.

“CIPS solves quite specific problems. It can become an alternative to SWIFT in working with those banks that are connected to it and are ready to accept transfers from Russia. Therefore, if a conditional Russian bank and a conditional Chinese bank are connected via CIPS, and they are ready to transfer money among themselves in local currencies, then this will work just fine,” Dostov said.

At the same time, according to Dostov, CIPS does not make it easier to make transactions from Russia to, for example, Deutsche Bank, which currently works with Russia to a limited extent. Similarly, if a bank in Russia has been disconnected from SWIFT, then CIPS is unlikely to resolve the issue of making transactions to Deutsche Bank. “You can build a complex scheme with a counterparty bank in China, however it is very risky for this counterparty in terms of sanctions,” the expert explained.

“There will be a great potential for Russian banks to connect to CIPS if settlements in yuan grow. Moreover, if other currencies are introduced, which is technically not that difficult, then I don’t see a big issue in using it for settlements in rubles,” Dostov added.

The expert explained that any payment system is a combination of two components: the first is a set of banks that have agreed and are ready to cooperate, the second is the exchange of information messages.

“From the point of view of the exchange of information messages, CIPS is no worse than SWIFT, and probably even more technologically advanced. The only thing that remains to do is to recruit a large number of banks that will be ready to pay in internal currencies of CIPS,” he said.

About CIPS

China launched CIPS, which supports cross-border payment and settlement in the yuan, in October 2015.

According to CIPS website, in June 2022, there were 19 financial institutions in the first batch of direct participants, of those 2 in mainland China and 17 in other countries. In January 2022, there were 159 participants in Europe, whereas in June the number has grown to 185.

The number of participants in Asia during 6 months of 2022 has increased from 934 to 965, of those 547 are in mainland China. During this period, the number of participants in Africa has increased by 3 to 46.

The number of participants in North and South America (29 and 17 respectively) and Oceania (23) remained unchanged.

As of June 2022, CIPS has 1,341 participants (76 direct and 1,265 indirect) from 106 countries and regions.

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