CIPS services will improve Pakistan's banking sector: Shaikh Shariq
by Zafar Hussain
The Cross-Border Interbank Payment System (CIPS) related facilities would improve Pakistan's banking sectors to accelerate trade and investment opportunities in the CNY (Chinese Yuan Renminbi), said Shaikh Muhammad Shariq, Chief Representative of the National Bank of Pakistan.
Addressing the Pakistan Investment Forum and the Cross-border E-commerce Conference held in Pakistani Embassy Beijing, he said that under China – Pakistan Economic Corridor, the two countries explore the establishment of multi-level cooperation mechanisms and strengthen policy coordination, and also strengthen financial reform and opening-up, control financial risks to create a good financial environment for CPEC, focusing on the regulatory side, financial institutions and financial markets, adding that another area of cooperation is amongst free trade zones and explore RMB offshore financial business.
"As a result of this cooperation, ICBC and Bank of China, Karachi branches are providing CNY clearing & settlement services in Pakistan. ICBC Karachi branch has also obtained the direct participation qualification of the first cross-border CNY clearing mechanism of CIPS (Cross-Border Inter-Bank Payments System) in South Asia to facilitate and ensure quick and smooth CNY clearing to improve bilateral trade", Shaikh added.
Shariq mentioned that the State Bank of Pakistan (SBP) and People's Bank of China (PBOC) made the currency swap arrangement in 2011, amounting to 10 billion yuan and 140 billion Pakistani rupees. As a result, bilateral trade and investment witnessed significant growth and strengthened the close and special relationship between the two countries.
"In 2018, the swap agreement was extended for three years, and the size was doubled to 20 billion yuan or 351 billion Pakistani rupees, as China became the largest trading partner, and the bilateral trade increased on yearly basis" he stated.
Answering the question about how China and other BRI countries can advance cooperation in the financial sector, he said recent cooperation between ICBC and State Bank of Pakistan is the best example and the collaboration in free trade zones and CNY offshore financial business is much needed to accelerate CPEC projects.