Global: China’s clearing and settlement service is no substitute for global Swift system- BIS head Carstens:

As the yuan is now the world’s fifth most used currency for payments by value, the Chinese central bank clearing system is playing an important complementary role in the global payment system, according to the boss of the global central bank.

However, China’s clearing and settlement service, Cross Border Interbank Payment System (CIPS), is no substitute for the global payment system Swift, Agustin Carstens, general manager of Bank of International Settlements (BIS), told the Post in an exclusive interview on Tuesday.

“In this space, it is not probably adequate to think about substitutes,” Carstens said. “It is not a race. Swift covers some forms of payments initiated by different types of intermediaries, while other systems could cover others. The important thing here is the complementarity of the different payment systems.

“There are many needs among societies, and we need to let the different solutions flourish.”

As part of its effort to promote the internationalisation of the yuan, China’s central bank launched CIPS in 2015. It allows global banks to clear cross-border yuan transactions directly onshore, instead of through clearing banks in offshore yuan hubs. CIPS processed 80 trillion yuan (US$11.44 trillion) in 2021.