Explainer | What is China’s Swift equivalent and could it help Beijing reduce reliance on the US dollar?
- The move to ban certain Russian banks from Swift is likely to accelerate expansion of Beijing’s cross-border payment and settlement system, analysts say
- The Cross-Border Interbank Payment System, or CIPS, was launched in October 2015 to boost international use of China’s currency in trade settlements
The United States, European Union, Canada and Britain have decided to exclude selected Russian banks from the Swift financial messaging system, the so-called nuclear option for sanctions.
Seven Russian banks, namley VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and the country’s development bank VEB, were removed from the system in March.
In May, the European Commission also proposed to remove Russia’s largest bank Sberbank, Credit Bank of Moscow and the Russian Agricultural Bank from the system.
The 10 banks account for more than 60 per cent of Russia’s banking market, the Financial Times reported.
Gazprombank, the country’s third-largest lender affiliated to energy giant Gazprom, has yet to be affected.
The move to ban Russian financial institutions is likely to accelerate expansion of Beijing’s own cross-border payment and settlement system, which has gained more prominence amid US threats to decouple its economy from China’s in 2019. Below are key facts about the Chinese system.