Chinese yuan Photo:VCG

 
China's Cross-Border Interbank Payment System (CIPS) signed direct participant agreements with six foreign institutions in Shanghai on Wednesday, marking the first time that the system's overseas foreign direct participant coverage extends to offshore yuan centers in Africa, the Middle East, Central Asia, and Singapore, which will facilitate the use of the yuan in cross-border transactions, China Media Group reported. 

Standard Bank, the African Export-Import Bank, First Abu Dhabi Bank, Kyrgyzstan's Eldik Bank, and United Overseas Bank became direct participants. The CIPS also conducted an onboarding ceremony for direct participation with Bangkok Bank on Wednesday. 

China has been consistently advancing the internationalization of the yuan, with cross-border trade payments serving as the primary channel this year, but the proportion of cross-border usage in investment financing and other financial transactions remains relatively low, said Xi Junyang, a professor at the Shanghai University of Finance and Economics, stressing the importance of promoting the cross-border use of the yuan in investment financing and financial transactions. 

Various measures, including signing direct participant agreements, will continue to facilitate cross-border trade payments and provide crucial institutional and technical support for cross-border yuan investment financing and transactions with elevated efficiency, Xi told the Global Times on Wednesday. 

The CIPS is the primary channel for cross-border yuan payments and clearing. As of the end of May, the CIPS system had 174 direct participants that can directly access the system to conduct business, along with 1,509 indirect participants that conduct business through direct participants. Its operations cover more than 4,900 corporate banking institutions across 187 countries and regions worldwide, according to a report by financial news portal stcn.com on Wednesday.

In April, China's central bank proposed measures to enhance cross-border financial services in the Shanghai International Financial Center. These include improving the functionality and global network reach of the CIPS, encouraging more banks to join the CIPS and expand its network scope, and strengthening its infrastructure.

In late May, the CIPS and the central bank of the United Arab Emirates signed a memorandum of understanding to enhance cross-border payment cooperation. The two sides will work together to develop a cross-border payment connectivity program, which will provide local currency clearing services for financial institutions in the Middle East and North Africa, the Xinhua News Agency reported. 
 
The implementation of these policies will substantially elevate the financial characteristics and attributes of the yuan's cross-border usage, while making its internationalization more comprehensive in functionality and broader in its scope of application, Xi said. 

Global Times