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EconomyChina Economy

What’s next for China’s yuan payment system? Adviser banks on close trade partners

Former ICBC chairman Chen Siqing says alternatives needed due to risk of financial weaponisation in US dollar-centric world

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China’s domestically developed Cross-border Interbank Payment System offers clearing and settlement services for cross-border yuan transactions. Photo: Shutterstock
Sylvia Ma

China should leverage bilateral and multilateral deals to accelerate the adoption of its cross-border payment system, a prominent political adviser has urged, as concerns deepen over the potential for intensified “financial weaponisation” in a global payment system centred around the US dollar.

“Given escalating geopolitical conflicts, frequent financial sanctions and a growing trend of financial weaponisation, the risk of ‘payment chain disruptions’ caused by excessive reliance on external systems is rising by the day,” said Chen Siqing, former chairman of Industrial and Commercial Bank of China (ICBC), the country’s largest bank in terms of assets.

“This must be taken very seriously and addressed with stronger countermeasures,” he wrote in the latest issue of China Finance, a publication supervised by the People’s Bank of China, the country’s central bank. The instrument that was the primary focus of Chen’s article was the domestically developed Cross-border Interbank Payment System (CIPS).

Chen also chaired Bank of China – another of the country’s “big four” state-owned banks with a greater international focus – from 2017 to 2019.

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