How China opened the door to creating a direct rival to US payment systems

China’s recent changes to the rules governing its global payment system could pave the way for turning it into a genuine alternative to Western networks, according to a new report.Beijing now appears to be moving towards building the Cross-border Interbank Payment System (CIPS) into a global platform compliant with multicurrency settlements and other foreign payment channels, said the study led by Ju Jiandong, a chair professor at Tsinghua University’s PBC School of Finance.Beijing recently undertook the first major update to the business rules governing the CIPS – which previously focused on yuan-denominated payments – in eight years, with the new version coming into effect in February.In the revised regulations, the system’s mandate has expanded from cross-border yuan transactions and financial operations to include the offshore yuan, as well as “other business approved by the People’s Bank of China”.The new rules also include a line explicitly mandating the creation of separate operational guidelines for “the processing of cross-border payments in foreign currencies such as Hong Kong dollars through the CIPS”.The updated regulations have also eliminated a set of strict rules on which financial institutions can participate in the CIPS, instead authorising operating institutions to formulate their own management rules for participants.