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CNY settlement and clearing mechanism solve the major difficulty of CPEC: SBP
Last Updated: 2021-10-21 14:51 | Gwadar Pro
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by Shi Yu
 
 
KARACHI, Oct 21th (Gwadar Pro) – “With the rise of CNY as a popular choice among world payment currencies, the availability of CIPS service to Pakistani customers will accelerate trade and investment opportunities in CNY and hence it gives a unique opportunity to reap benefits arising out of internationalization of CNY,” Ali Raza, Director of TOD, SBP, said at a webinar in celebration of Industrial and Commercial Bank of China (ICBC)’s CIPS (Cross-Border Inter-Bank Payments System) initial operation in South Asia.
 
In order to facilitate the cross-border CNY clearing and settlement, and improve the service quality and efficiency of CNY clearing operation in Pakistan, the Webinar was held on October 20, 2021 by ICBC Karachi Branch. More than 100 participants of whom most are from local banks had attended the webinar. Dignitaries from ICBC Head Office, State Bank of Pakistan, Embassy of P.R. China in Pakistan, CIPS Company had given keynote speeches at the Webinar.
 
In September, ICBC obtained the direct participation qualification of the first cross-border CNY clearing mechanism of CIPS in South Asia. As the most important host country of ICBC in South Asia, Pakistan’s CNY clearing capability will be efficiently improved and the trade with China will be more convenient.
 
Chen Yuncheng, the CEO of ICBC Karachi Branch presided over the meeting and delivered a welcome speech to the audience. He said: “ICBC Pakistan, as the earliest and biggest CNY clearing bank and the first direct participant of CIPS in South Asia, will go on communicating with local banks in Pakistan and better serving all partners to promote CNY utilization in Pakistan and China-Pakistan bilateral economic prosperity.”1
 
Ali Raza believed that this event will be a landmark of China-Pakistan trade relationship and greatly in favor of development of Pakistani economy. He said: “The usefulness of SBP initiatives in the right direction resulted in expansion of local CNY settlement and clearing mechanism in Pakistan and yielded in long-term benefits to China-Pakistan relationship in general, and Pakistan’s economy and banking system in particular. This direct participation will result in time saving and quick response in case of any settlement related queries from local banks. It will also add to the overall efficiency since ICBC Pakistan would not require any intermediary in the on-shore market in China. The provisions of CIPS related services in our local market will improve Pakistan’s financial market infrastructure, especially in terms of increasing efficiency of the local banking system in relation to CNY transactions, enhancing market liquidity and supporting SBP’s aim of providing a conducive policy and regulatory environment to encourage the use of local currencies in trade and finance.”
 
Xie Guoxiang, Commercial Minister-Counselor of the Chinese Embassy in Pakistan appreciated the efforts made by ICBC Karachi Branch in cross-border CNY clearing infrastructure construction in Pakistan and placed high hopes on the development prospect of bilateral trade in CNY between the two countries in the future. “Each of regulator and participants of financial sectors are the best bridge and tie in Pak-China economy cooperation, also as the best angel of the friendship between China and Pakistan. In the coming years, the Embassy of P.R. China in Pakistan will focus our efforts on promoting CNY usage in Pakistan and support both countries as always to boost bilateral cooperation.”
 
Under these circumstances of COVID-19, CIPS System has made a great effort to push forward the global use of CNY. The president of CIPS introduced at the occasion that in 2021, CIPS processes over 12 thousand transactions per day on average, reaching a year-on-year increase of 59%. The daily transaction amount reaches CNY 310 billion, a year-on-year increase of 84%. Despite a still-recovering world economy, CIPS transaction volume has constantly hit new highs in 2021. In October this year, the record high of daily trading amount and trading volume reached CNY 516 billion and 33.6 thousand payments. The transaction from and to Pakistan have also seen exponential growth. Now 10 months into 2021, the trading amount has already suppressed that of 2020. At the same time, the transaction volume has hit CNY 196 trillion, reaching an increase of near 30%.
 
Now CIPS has 71 direct participants and 1159 indirect participants, covering 103 countries. Their services have reached more than 3000 banks in nearly 200 countries and regions. Pakistan is home to 11 indirect participants of CIPS, making it the most important CNY market in South Asia. 
 
This webinar enabled local banks to have a further understanding of cross-border CNY clearing operation, built a strong confidence on utilization of CNY for trade & settlement, and accelerated the progress of CNY internationalization in Pakistan.
 
This article originally appeared on Gwadar Pro.   

(Editor:Liao Yifan)

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CNY settlement and clearing mechanism solve the major difficulty of CPEC: SBP
Source:Gwadar Pro | 2021-10-21 14:51
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