Cross-Border Interbank Payment System

Based on Wikipedia: Cross-Border Interbank Payment System

The Quiet Financial Revolution You Haven't Heard About

Every day, roughly thirty thousand international payments worth over ninety billion dollars flow through a system that most people in the West have never heard of. It's not SWIFT, the Belgian-based messaging network that has dominated global banking for half a century. It's China's Cross-Border Interbank Payment System, known by its acronym CIPS, and it represents one of the most ambitious attempts in modern history to rewire how money moves around the world.

Why should you care about payment infrastructure? Because the pipes through which money flows are also pipes through which power flows.

What CIPS Actually Does

To understand CIPS, you first need to understand a basic problem in international banking. When a company in Germany wants to pay a supplier in China, the payment doesn't magically teleport from one bank account to another. Instead, it needs to pass through a chain of correspondent banks, each speaking slightly different financial languages, each taking a cut, each adding delays.

CIPS provides clearing and settlement services specifically for payments denominated in renminbi, China's currency. Clearing means verifying that both sides of a transaction are legitimate and have the funds they claim. Settlement means actually moving the money. Think of it as a specialized highway built specifically for yuan-denominated traffic, complete with its own customs checkpoints and toll booths.

The system launched in October 2015, backed by the People's Bank of China, which is China's central bank. At launch, it had just nineteen direct participants and a hundred seventy-six indirect participants from fifty countries. A direct participant opens an account directly with CIPS and can send and receive messages through the system. An indirect participant accesses the network through a direct participant, like a smaller bank routing transactions through a larger correspondent bank.

A decade later, those numbers look radically different.

The Growth Curve

The expansion has been remarkable. By the end of 2019, CIPS had grown to thirty-three direct participants and over nine hundred indirect participants spanning ninety-four countries. The network reached more than three thousand banking institutions across a hundred sixty-seven countries and regions.

Then came acceleration.

In 2021, the system processed around eighty trillion yuan, equivalent to about twelve and a half trillion US dollars. By 2022, that had grown to nearly ninety-seven trillion yuan, or roughly fourteen trillion dollars, with fourteen hundred twenty-seven financial institutions connected across a hundred nine countries.

The 2023 figures showed the pace quickening further: six point six million transactions totaling a hundred twenty-three trillion yuan, representing year-over-year growth of fifty percent in transaction count and twenty-seven percent in value. Daily volume hit nearly twenty-six thousand transactions worth about sixty-seven billion dollars.

By 2024, annual volume reached a hundred seventy-five trillion yuan—around twenty-four trillion dollars—with daily transactions climbing to thirty thousand five hundred, worth over ninety billion dollars each day.

As of mid-2025, CIPS counts a hundred seventy-six direct participants and over fifteen hundred indirect participants. The geographic breakdown tells an interesting story: eleven hundred two of those indirect participants are in Asia (including five hundred sixty-three from mainland China), two hundred sixty-one from Europe, sixty-one from Africa, thirty-four each from North and South America, and twenty-two from Oceania. The network's reach extends to nearly five thousand banking institutions across a hundred eighty-nine countries.

The Paradox of SWIFT Dependency

Here's where things get interesting, and perhaps surprising. Despite being positioned as an alternative to the Western-dominated financial system, CIPS relies on SWIFT's messaging service for over eighty percent of its transactions.

Wait, what?

SWIFT—the Society for Worldwide Interbank Financial Telecommunication—is a Belgian cooperative that doesn't actually move money. It moves messages about money. When your bank sends an international wire transfer, SWIFT provides the secure messaging system that tells the receiving bank what's coming. Think of it as the postal service for financial instructions.

CIPS uses SWIFT's messaging format and standards. In March 2016, the two organizations signed a memorandum of understanding to cooperate. By September 2017, they were sharing reference data about which financial institutions participate in CIPS, publishing this information through SWIFT's reference data service and updating it monthly.

This arrangement might seem to undercut CIPS's role as an alternative system. But there's a strategic logic here. By adopting the same messaging standards that banks worldwide already use—the ISO 20022 standard, which is becoming the global norm for financial messaging—CIPS made itself compatible with existing banking infrastructure. A bank doesn't need to completely retool its systems to process CIPS transactions. The familiar format reduces friction.

CIPS did add one notable feature: support for Chinese characters in financial messages, moving beyond the Latin alphabet that SWIFT traditionally used.

The Standards Underpinning Everything

International payments depend on a thicket of technical standards that most people never think about. These standards ensure that when one computer tells another computer to move money, both computers understand exactly what's being asked.

CIPS subscribes to several of these international standards. ISO 9362 defines Bank Identifier Codes—those eight or eleven character strings like "CHASUS33" that uniquely identify financial institutions. ISO 10383 creates codes for exchanges and markets. ISO 13616 governs International Bank Account Numbers, or IBANs, those long alphanumeric strings that European bank customers know well. ISO 15022 and its successor ISO 20022 define the structure and vocabulary of financial messages themselves.

These dry technical details matter because they represent the connective tissue of global finance. When CIPS adopts these standards, it's not just checking boxes—it's ensuring interoperability with the existing financial ecosystem while building something that could eventually operate independently of it.

The Connector: Bridging Banks to the System

CIPS developed something called the CIPS Connector, which serves as the information exchange component between participants and their institutional clients. Based on the ISO 20022 message scheme, the Connector handles a range of functions: customer credit transfers, financial institution transfers, queries and answers, account statements, and various value-added services.

In practical terms, this means a bank that wants to process yuan payments can plug into CIPS without rebuilding its entire technology stack. The Connector translates between the bank's internal systems and CIPS's requirements, handling the technical handshakes that make international payments work.

Who Owns This System?

The ownership structure of CIPS reveals something about its nature and ambitions. The People's Bank of China holds the largest stake at sixteen percent—substantial but not majority control. Other Chinese shareholders include NAFMII (the National Association of Financial Market Institutional Investors), UnionPay (China's card payment network), and the large state-owned Chinese banks.

But here's the twist: CIPS also has foreign shareholders. HSBC, Standard Chartered, Bank of East Asia, DBS Bank, Citigroup, Australia and New Zealand Banking Group, and BNP Paribas all hold equity stakes.

This mixed ownership serves multiple purposes. It gives international banks skin in the game, increasing their incentive to route transactions through CIPS. It provides legitimacy and technical expertise from institutions with deep experience in global payments. And it somewhat softens the perception of CIPS as purely a tool of the Chinese state.

The Geopolitical Context

You cannot understand CIPS without understanding sanctions.

In 2012, when China's central bank began developing CIPS, the precedent of using financial infrastructure as a weapon was already well established. The United States and European Union had demonstrated their willingness to disconnect countries from SWIFT—or threaten to do so—as a means of economic pressure. Iran faced such disconnection. Russia would later face it too, with devastating effects on its economy after the 2022 invasion of Ukraine.

The logic for China was clear. Reliance on Western-controlled financial infrastructure meant vulnerability to Western pressure. Building an alternative meant building resilience.

Academic Tim Beal, who has studied these systems, places CIPS among the responses to American sanctions, noting that commentators view it as contributing to de-dollarization—the gradual shift away from the US dollar as the world's dominant currency for international trade and reserves.

This doesn't mean CIPS is primarily about evading sanctions, though that capability certainly exists. The system's stated purpose is facilitating legitimate cross-border renminbi business: trade in goods and services, direct investment, financing, and personal remittances. But the capability to operate outside Western control creates options that wouldn't otherwise exist.

Phase One, Phase Two

CIPS didn't emerge fully formed. Its development proceeded in deliberate phases, each expanding capabilities.

Phase one launched on October 8, 2015, establishing the basic infrastructure for cross-border yuan payments. This was significant timing—it came just two months before the International Monetary Fund added the yuan to its basket of reserve currencies known as Special Drawing Rights, or SDR. China had been pushing for this recognition for years, and having robust payment infrastructure for its currency was part of demonstrating the yuan's readiness for reserve currency status.

Phase two launched on a pilot basis on March 26, 2018, with ten direct participants. Full operation began on May 2, 2018. The key enhancement came that October when CIPS implemented Delivery Versus Payment settlement—a mechanism that ensures securities and payments are exchanged simultaneously, reducing the risk that one party delivers without receiving. This upgrade specifically supported Northbound Trading of Bond Connect, a program allowing international investors to access mainland Chinese bonds.

The Bond Connect integration illustrates how CIPS fits into China's broader financial opening. As China has sought to attract foreign investment into its bond market—now the second largest in the world—it needed payment infrastructure that international institutions could trust and use efficiently.

The Belt and Road Connection

By the end of 2019, over a thousand banking institutions from fifty-nine countries and regions participating in China's Belt and Road Initiative were conducting business through CIPS. This wasn't coincidental.

The Belt and Road Initiative, launched in 2013, represents China's massive infrastructure investment program spanning Asia, Africa, Europe, and beyond. These projects—ports, railways, power plants, telecommunications networks—require moving enormous sums across borders. Having payment infrastructure that facilitates yuan transactions directly serves the initiative's goal of increasing Chinese economic influence.

When a Chinese construction company builds a port in Sri Lanka or a railway in Kenya, payments flowing through Chinese-controlled infrastructure represent a kind of financial sovereignty that dollar-denominated payments through Western systems do not.

Competitors and Comparisons

CIPS isn't the only attempt to build payment infrastructure outside Western control. Russia developed SPFS, the System for Transfer of Financial Messages, as its SWIFT alternative—a system that became crucial after Russia's 2022 disconnection from SWIFT. India created the Structured Financial Messaging System. Various bilateral payment arrangements between countries seek to bypass dollar-denominated transactions entirely.

What distinguishes CIPS is its scale and integration. With nearly five thousand connected banking institutions across a hundred eighty-nine countries, it has achieved a network effect that smaller alternatives lack. A payment system's value grows exponentially with the number of institutions connected to it—if your bank can reach more counterparties through a given system, that system becomes more useful.

CIPS also benefits from the sheer size of China's economy. When you're the world's largest trading nation, financial institutions have strong incentives to connect to your payment infrastructure regardless of geopolitical considerations. Money goes where trade goes.

What This Means for the Future

The trajectory suggests that within a few years, CIPS will process well over a hundred billion dollars in daily transactions. If current growth rates continue—and there's no obvious reason they wouldn't—the system will become an increasingly significant piece of global financial plumbing.

This doesn't mean the end of dollar dominance or SWIFT's relevance. The dollar still accounts for roughly sixty percent of global foreign exchange reserves and an even higher share of international trade invoicing. SWIFT processes tens of millions of messages daily, dwarfing CIPS's current volumes.

But CIPS represents something significant nonetheless: the emergence of parallel infrastructure that reduces the world's dependence on any single system or currency. For China, this means reduced vulnerability. For countries seeking to trade with China outside dollar-based systems—whether due to sanctions, preferences, or simple convenience—it means options.

The pipes through which money flows shape what's possible. As those pipes multiply and diversify, the geography of financial power shifts in ways both obvious and subtle. CIPS is one piece of that shift—perhaps not a revolution, but certainly an evolution in how the world's money moves.