SWIFT stands one of the most prominent global cross-border payment and financial messaging systems out there. Now, however, SWIFT has opted to expand, doing so through a joint venture with the clearing center and digital currency research institute of China’s central bank. Of course, this makes China’s plans of using its digital yuan on a global scale clear as day, as well.
East And West Coming Together
This new joint venture will be based in Beijing, and will have other notable shareholders within it as well, such as the Payment & Clearing Association of China, as well as the Cross-border Interbank Payment System, or CIPS. Both of these entities are themselves supervised by the People’s Bank of China, or PBOC.
This new joint venture will go by the name of Finance Gateway Information Services Co. The venture itself was established on the 16th of January, 2021, in Beijing. Its business scope ranges from data processing to information system integration as well as technological consultancy. This information comes thanks to the National Enterprise Credit Information Public System and its website.
The Crypto Arms Race Continues.
As it stands now, China is the leader when it comes to the ongoing “arms race” between world powers for the development and launch of their respective central bank digital currencies, or CBDCs. China, in particular, has already launched an array of domestic trials across several of the country’s major cities, such as Chengdu, Shenzhen, as well as Hangzhou.
Every nation pursuing CBDCs are coveting its promise of increasing overall money flow oversight. Alongside this, it will allow these respective nations to formally internationalize their respective currencies, as well as streamline cross-border payments in terms of efficiency. As tensions only mount between China and the US, CIPS and SWIFT have been both partners and competitors within the cross-border payment space. With this new venture, it seems that these two entities want to work together to gain mutual prophets.
China Being China
Through a report made in July of last year, BOC International (BOCI) had identified that the CIPS system, should it be used instead of SWIFT, would greatly reduce exposure of the global payments data of China across the US. As such, the country has a lot of incentive to combat the Belgium-based payments system.
Time will tell how this entire event will turn out, but it’s clear that this will be an exciting new step. With any luck, consumers will benefit from it, but the future remains to be seen on that front.