Latest news with #Cross-borderInterbankPaymentSystem
The Star
18-07-2025
- Business
- The Star
Asean accelerates de-dollarisation
Whenever he travels around the Southeast Asian region or to China, Malaysian private equity investor Ian Yoong Kah Yin always uses his e-wallet to settle all payments. Yoong, a former investment banker, seldom travels with a big chunk of cash, preferring to use an app he downloaded on his phone so he can use a QR code to pay in Malaysian ringgit or any local currency. Yoong said using a QR code is not only convenient but also cuts transaction costs as he does not need to convert ringgit to US dollar first and then to another local currency, avoiding double currency conversion rates. The reduced role of the US dollar and the growing role of the Chinese yuan and local currencies used by members of the Association of Southeast Asian Nations is "inevitable", according to Yoong, who noted there are about 100 banks in the ASEAN region that are part of the yuan-based Cross-border Interbank Payment System, or CIPS. "ASEAN economies are accelerating the move away from the US dollar as geopolitical uncertainties, monetary shifts and increasing currency volatility prompt de-dollarisation in the region," Yoong told China Daily. He said Washington's "erratic trade policy decisions" combined with the recent "sharp underperformance" of the US dollar are fueling a rapid shift to other currencies. Yoong's personal experience and insights on using more Chinese and ASEAN currencies in cross-border transactions reflect how ASEAN countries are gradually reducing their dependence on the US dollar to cut transaction costs, enhance efficiency and mitigate the impact of foreign exchange fluctuations. ASEAN leaders have committed to promoting local currency settlements, as stated in the ASEAN Economic Community Strategic Plan 2026-2030 adopted at the 46th ASEAN Summit held on May 26 in the Malaysian capital city Kuala Lumpur. The regional bloc aims to deepen financial integration and inclusion through several measures such as liberalising capital accounts to facilitate seamless cross-border investments and financing, strengthening regional payment connectivity and promoting local currency settlements. Enhancing payment connectivity is also seen as aiding trade and investments in the region. The strategic plan was formulated at a time when the US dollar, which has long dominated global trade and investment, was sinking to multi-year lows. On April 21, for example, the US Dollar Index fell to a three-year low following US President Donald Trump's criticism of Federal Reserve Chair Jerome Powell. On June 26, the dollar sank to a fresh three-year low on the back of a report that Trump was considering nominating the next Fed chair early or a few months before Powell's formal departure in May 2026. Fragility underscored Dutch investment bank ING said the escalating tensions in the Middle East "underscored the recent fragility" of the US dollar. "A spike in geopolitical risk and oil prices should have sent an oversold and undervalued dollar soaring, but the support for the greenback was instead small in size and duration," ING said in its research paper on June 26. Nawazish Mirza, a professor of finance at the Excelia Business School in France, said by allowing direct payments in local currencies, ASEAN states have reduced their reliance on intermediary currencies such as the US dollar, and this has led to lower transaction costs, reduced exchange rate risks, and enabled faster settlement times. Mirza said ASEAN's move toward de-dollarisation has been "unmistakable" over the last two years. He noted that in 2024, the share of intra-ASEAN trade settled in local currencies was above 25 percent, compared to less than 10 percent in 2019. While the US dollar remains dominant overall, accounting for over 70 percent of global trade invoicing, ASEAN's initiatives to promote local currencies and the renminbi are gaining traction, he said. Mirza said policies such as currency swap lines, bilateral local currency settlement agreements, and digital payment innovations, are making non-dollar settlements more viable and attractive. "The speed of this transition will depend on sustained market confidence, liquidity, and the stability of these alternative currencies," he said. Ying Jian, principal strategist at Bank of China's Hong Kong Financial Research Institute, said Chinese enterprises are the "most active participants and promoters" of the international use of the renminbi, and their growing presence in ASEAN has spurred demand for renminbi settlement, trading and financing. In a research paper published in 2024, Ying wrote that in 2023, the renminbi cross-border receipts and payments for trade in goods between ASEAN and China exceeded 2 trillion yuan ($279 billion) for the first time, or 47.8 percent higher than the level in the previous year, and accounted for over 30 percent of the total bilateral trade. Ying also noted that China supports ASEAN's move to explore local currency settlement. The People's Bank of China, the nation's central bank, has signed bilateral currency swap agreements with the central banks of Thailand, Malaysia, Indonesia and Laos. Mirza also hailed ASEAN countries' decision a few years ago to implement a QR code payment system that allows direct payments in local currencies, noting this represents a "significant leap" for ASEAN's regional integration. As early as 2020, Cambodia and Thailand launched a cross-border QR payment system. Singapore's payment linkage with Thailand was established in 2021, and it launched a pilot with Indonesia in 2022. Five Southeast Asian central banks — Indonesia, Malaysia, the Philippines, Singapore, and Thailand — signed a memorandum of understanding on regional cross-border payments ahead of the G20 summit held in Bali, Indonesia, in November 2022. Payment connectivity At the 42nd ASEAN Summit held in May 2023 at Labuan Bajo, Indonesia, ASEAN leaders signed an agreement to advance regional payment connectivity and promote local currency transactions. "The QR interoperable payment system is the way to go," said Joanne Lin Weiling, a senior fellow and co-coordinator of the ASEAN Studies Center at the ISEAS-Yusof Ishak Institute in Singapore. She said this system promotes regional integration and trade and enhances the region's resilience against external headwinds, including growing trade protectionism. Lin, who has used digital wallets while traveling around the region, can personally attest that a QR code payment system is "quicker, more convenient and easily accessible by all citizens as long as they have a smartphone, and bank account that is linked to QR payment". Kriengsak Chareonwongsak, president of the Bangkok-based Institute of Future Studies for Development, said it is crucial for countries like Thailand to promote the use of renminbi to facilitate cross-border payments, given ASEAN's strategic economic ties with China. He cited Bangkok Bank, which is the first Thai bank approved by China's central bank to become a direct participant in China's CIPS. In a statement released in April, Bangkok Bank said becoming a direct participant allows it to facilitate direct international transactions in renminbi via CIPS. This reduces transaction time and ensures faster payments, the bank said. "If they reduce the use of the US dollar (in international transactions), where do they go? They have to go for alternatives. And renminbi is one alternative," he said. For Mirza of Excelia Business School, the main benefits of using the renminbi include reduced foreign exchange costs, diversification of reserves, and closer trade links with China. "Furthermore, while the People's Bank of China has signed several bilateral swap agreements with ASEAN central banks, the operationalisation of the renminbi as a primary settlement currency still lags behind the US dollar in scale and acceptance. For ASEAN, the key is balancing diversification with financial stability, especially as renminbi's full internationalisation remains a gradual process," he said. - China Daily/ANN
South China Morning Post
16-07-2025
- Business
- South China Morning Post
China looks to Africa as testing ground for global roll-out of yuan
China appears to be positioning Africa as a testing ground for internationalisation of the yuan as it seeks to expand the currency's global use and break the dominance of the US dollar. During a recent meeting in Cairo, the central banks of China and Egypt signed a series of agreements to promote the use of the yuan in trade and investment. These deals – lauded by People's Bank of China governor Pan Gongsheng as a key step in advancing economic ties – were signed last week during Chinese Premier Li Qiang's visit to Egypt. They will explore a currency swap as well as panda bonds in yuan issued by overseas companies in mainland markets. The deals also cover cooperation on electronic payments, including expanding China's UnionPay services and facilitating cross-border business in yuan for banks in the China-Egypt TEDA Suez Economic and Trade Cooperation Zone near the city of Suez. That will be done via local currency settlements made through the Cross-border Interbank Payment System, or CIPS – China's alternative to the SWIFT international payment network. Deals signed last week include facilitating cross-border business in yuan for banks in the China-Egypt TEDA Suez Economic and Trade Cooperation Zone near the city of Suez. Photo: Handout Egypt joins a growing list of African nations that have yuan-based deals with China, including South Africa, Nigeria and Angola which are all exploring or implementing the use of the Chinese currency for trade and financial transactions.
Daily News Egypt
10-07-2025
- Business
- Daily News Egypt
Egypt, China central banks sign pacts to boost yuan use, payment systems
The central banks of Egypt and China on Tuesday signed three memoranda of understanding aimed at promoting the use of the Chinese yuan and expanding electronic payment cooperation, the Central Bank of Egypt (CBE) said in a statement. The signings took place after a meeting between CBE Governor Hassan Abdalla and his counterpart from the People's Bank of China, Pan Gongsheng, at the CBE's headquarters in Cairo during the Chinese official's current visit to Egypt. During the talks, the two officials discussed several key topics, including a currency swap agreement, settling payments in local currencies, Egypt's issuance of 'Panda' bonds in the Chinese market, and linking their respective payment systems, the statement said. They also affirmed the importance of increasing the presence of each other's banks to encourage joint investment. One of the agreements was signed between Suez Canal Bank, TEDA China-Africa Investment Co., and CIPS Co. Ltd., the operator of China's Cross-border Interbank Payment System. It aims to promote and encourage the use of the Chinese yuan within the China-Egypt Trade and Economic Cooperation Zone. China's UnionPay signed two protocols. The first, with the Egyptian Banks Company for Technological Advancement (EBC), aims to improve e-payment infrastructure and expand the acceptance of UnionPay cards in the Egyptian market. The second, with fintech firm Paymob, focuses on cooperation in marketing electronic payment acceptance services for UnionPay cardholders. In the statement, CBE Governor Hassan Abdalla welcomed the visit, saying it was an important opportunity to exchange expertise and expand financial and banking cooperation to support economic stability and sustainable development in both countries. The agreements underscore the efforts by both countries to enhance their strategic partnership and support economic integration by developing financial infrastructure and expanding cooperation in digital payments, the CBE statement added.
Al-Ahram Weekly
10-07-2025
- Business
- Al-Ahram Weekly
Egypt, China ink 3 financial cooperation agreements - Economy
Hassan Abdalla, the governor of the Central Bank of Egypt (CBE), and Pan Gongsheng, the governor of the People's Bank of China (PBOC), signed three cooperation agreements on Thursday aimed at deepening financial cooperation between the two countries. The signing took place following a meeting between the two sides during Gongsheng's current official visit to Cairo. The meeting, held at the CBE headquarters, underscored the growing strategic partnership between Egypt and China and explored mechanisms for expanding cooperation between their central banks. During the talks, both sides discussed ways to strengthen coordination on various monetary and financial issues, including activating a local currency swap agreement, facilitating payments settlement in local currencies, exploring the issuance of Panda Bonds, and creating interoperability between their respective national payment systems. The two governors also explored ways to increase the presence of banks from each side in the other's financial system and to promote bilateral investment flows. For his part, Abdalla expressed his appreciation for Gongsheng's visit and the deep-rooted ties between Egypt and China, highlighting the occasion as a valuable platform for exchanging expertise and reinforcing collaboration in banking and financial services. He affirmed that this cooperation supports economic stability and advances sustainable development objectives for both countries. The two central bank governors witnessed the signing of three memoranda of understanding aimed at expanding cooperation across key sectors of mutual interest. The first memorandum was signed between the Suez Canal Bank, China-Africa TEDA Investment Company, and CIPS Company Limited — the institution responsible for operating China's Cross-border Interbank Payment System (CIPS). The agreement aims to enhance the use of the Chinese yuan within the China-Egypt Suez Economic and Trade Cooperation Zone, facilitating smoother trade and financial transactions between the two countries. The second was signed between UnionPay International and the Egyptian Banks Company for Technological Advancement (EBC). This agreement aims to strengthen Egypt's electronic payment infrastructure and enhance the acceptance of UnionPay cards throughout the Egyptian market. The move is expected to enable UnionPay cardholders to make seamless purchases across electronic point-of-sale (POS) terminals and e-commerce platforms nationwide. The third MoU saw UnionPay International partner with Egyptian fintech company Paymob to support the expansion of electronic acceptance services for merchants and digital platforms connected to Paymob's network. This partnership aims to boost financial inclusion and make Egypt more accessible to Chinese consumers and businesses. The signing of the three memoranda reflects the joint commitment of Egypt and China to deepen their strategic partnership and strengthen financial connectivity. These steps align with broader efforts to advance digital transformation, enhance trade facilitation, and promote economic integration between the two nations. The visit marks a new chapter in Egypt-China relations, laying the foundation for more collaborative initiatives in banking, finance, and beyond. Follow us on: Facebook Instagram Whatsapp Short link:
Qatar Tribune
22-06-2025
- Business
- Qatar Tribune
China's payment system spreads across Africa and Asia amid US trade war
Agencies China's cross-border yuan payment system has signed up more financial entities from Africa, Central Asia and the Middle East, as Beijing accelerates efforts to promote the global use of its currency amid rising tensions with the United States. A group of six financial institutions officially joined the yuan-based Cross-border Interbank Payment System (CIPS) as direct participants during a ceremony in Shanghai on Wednesday, becoming the latest entities to sign up to China's alternative to the Society for Worldwide Interbank Financial Telecommunication system. The newcomers include the African Export-Import Bank, First Abu Dhabi Bank, South Africa's Standard Bank, Singapore's United Overseas Bank, the Kyrgyzstan-based Eldik Bank, and Chongwa (Macau) Financial Asset Exchange, a state-owned asset trading platform from the special administrative region, according to state broadcaster CCTV. Beijing has been promoting the CIPS – which was first launched in 2015 – as it strives to expand the use of the yuan in global trade and hedge against any potential moves by the United States to impose financial sanctions on Chinese system had 174 direct participants as of the end of May, though most of them were made up of domestic and overseas branches of Chinese banks, as well as Chinese branches of global financial giants such as HSBC, JP Morgan and Citibank. A direct participant refers to an entity that owns a CIPS account and can directly remit through the system, while indirect participants have to rely on others to complete transactions on their behalf. A total of 175 trillion yuan) of transactions was made via the CIPS last year, an increase of 43 per cent year on year. Beijing has been stepping up efforts to popularise the system in recent months as tensions with the US have risen over a slew of trade and technology issues, with Chinese officials warning of the danger of financial tools being weaponised. 'As geopolitical tensions escalate, traditional cross-border payment infrastructure is prone to being politicised and weaponised as a unilateral sanction tool, undermining the international financial order,' said Pan Gongsheng, governor of the People's Bank of China, at the Lujiazui Forum on Pan did not name a specific country during the speech, the remarks were likely aimed at Washington. Chinese academics have long warned of the danger posed by US financial sanctions targeting China, citing the Russia case, and anxiety in Beijing jumped after US President Donald Trump raised tariffs on Chinese goods to unprecedented levels in April. Though Beijing and Washington have since signed a trade truce – which included an agreement to roll back tariffs on each other's goods for 90 days – tensions remain high, with the two sides yet to agree a permanent deal to de-escalate the trade war.
