China launched a cross-border renminbi payments system Thursday, signaling another key step in the nation’s efforts to boost the use of the Chinese currency in international trade and investment.
Nineteen banks are participating in the first phase of the system, which offers a platform for real-time settlements.
Observers expect the system to boost the efficiency in cross-border settlements and pave the way for financial institutions worldwide to play a part in the clearing system of the Chinese currency.
The system, developed by the People’s Bank of China, will have a significant and long-term bearing on China’s economic development and connection to the rest of the world, the Hong Kong Economic Journal quoted PBoC deputy governor Fan Yifei (范一飛) as saying.
Among the 19 participating banks, eight are foreign institutions that can take part in the system through their locally incorporated subsidiaries in mainland China.
Otherwise, foreign banks can only be indirect participants of the system, and are only allowed to connect to the system through direct participation banks.
There are currently 176 indirect participation banks, including the Hongkong and Shanghai Banking Corp.
According to some observers, the new system could affect the settlement income of Bank of China Ltd. (03988.HK), which currently takes a large share of the business.
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