CHINA’S central bank Thursday launched the China International Payment System (CIPS), a worldwide payments superhighway for the yuan to facilitate trade settlement and investment dominated in the yuan.

    The CIPS will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process, said Fan Yifei, vice president of the People’s Bank of China.

    It will comprise two phases, the first of which will look to facilitate cross-border yuan business activities and support trade in goods and services. The second will improve clearing efficiency for direct participants in the yuan market, the bank said in a statement on its website.

    The CIPS provides capital settlement and clearing services for cross-border yuan transactions for financial institutions domestically and abroad.

    Previously, cross-border yuan clearing had to be done either through one of the offshore yuan clearing banks in places like Hong Kong, Singapore and London, or else with the help of a corresponding bank on the Chinese mainland.

    CIPS will have a significant role in shoring up China’s real economy and promoting the “going abroad” strategy of domestic enterprises, Fan said.

    Developed and administered by the central bank, CIPS enables market participants outside China to clear yuan transactions with their Chinese counterparts directly from 9 a.m. to 8 p.m. Beijing time during any working day under a coding format in line with international practice.

    China’s yuan became one of the world’s top five payment currencies in November 2014, overtaking the Canadian dollar and the Australian dollar. (SD-Agencies)

    (More on P5)