PBoC Eyes Payment Stability Through SWIFT JV
The People’s Bank of China unveiled plans for joint venture with SWIFT which was newly established earlier this year.
The PBoC’s joint venture will build a localized messaging network for a more stable connection between Chinese financial institutions and the main SWIFT network, according to a statement from the central bank that highlighted issues, particularly from small mainland lenders.
A data warehouse will also be established to store, monitor and analyze cross-border messaging information for easier risk control by the PBoC.
The joint venture – Finance Gateway Information Services Co. – was established earlier this year in Beijing. In addition to the PBoC, other shareholders include CIPS (Cross-border Interbank Payment System), PCAC (Payment & Clearing Association of China) and CNCC (China National Clearing Centre).
SWIFT Reversal
Interestingly, the PBoC’s decision contrasts with a Bank of China International (BOCI) report last year which urged against reliance on SWIFT due to political risks in favor of CIPS which is now a shareholder of the new joint venture.
«A good punch to the enemy will save yourself from hundreds of punches from your enemies,» said the report which was co-authored by Guan Tao, BOCI chief economist and former director at State Administration of Foreign Exchange's (SAFE) international payments department.
