MNCs drive expansion of China's CIPS

Growing demand from multinationals for diversified cross-border payment routes is driving further expansion of China's Cross-Border Interbank Payment System (CIPS) as foreign firms seek to reduce currency risks and improve liquidity management, bank executives and economists said.

CIPS, the primary platform for cross-border yuan clearing and settlement, has expanded its participant base and service scope in recent years, supported by improved regulations and increasing cross-border renminbi usage. Analysts said the system's development reflects broader efforts to strengthen resilience in cross-border financial arrangements amid intensified geopolitical and economic uncertainties.

By the end of 2025, CIPS had 193 direct and 1,573 indirect participants — spanning 124 countries and regions and up from just 19 and 176, respectively, at its launch a decade ago. The system provides cross-border services to over 5,000 banking institutions across 190 countries and regions, said CIPS Co Ltd, operator of the system.

While CIPS remains smaller than established global payment networks — with more than 11,500 institutions connected to the SWIFT messaging system — its fast expansion is seen as significant for a more balanced global financial architecture.

"CIPS provides global enterprises with an independent, reliable and direct primary channel for cross-border RMB settlement, enhancing the resilience and stability of the global financial infrastructure," said Florence Tan, head of global transaction services at DBS China, one of the earliest direct participants in CIPS.

Strong market fundamentals are expected to continue to drive CIPS, Tan said, adding, "Enterprises have a clear commercial reason to use RMB — to optimize treasury management, reduce foreign exchange conversion costs and mitigate uncertainty."

The rise of CIPS coincides with a firmer yuan, as doubts over the US Federal Reserve's independence further challenged the dollar's reliability. On Thursday, the offshore yuan rose above 6.83 against the greenback, a three-year high, before retreating to 6.88 on Monday.

Song Ke, executive president of Shenzhen Advanced Institute of Finance, Renmin University of China, said the expansion of CIPS reflects a broader trend among economies seeking independent cross-border payment infrastructure for security and substitutability.

China has stressed the importance of an independent, controllable, safe and efficient financial infrastructure system.

Song, also deputy director of the university's International Monetary Institute, said the expanding CIPS participation has reduced intermediate costs, attracting even more users as a result.

Last year, CIPS' direct participants for the first time included foreign-invested institutions in Africa, the Middle East, Central Asia and the Singapore offshore RMB center, while it handled payment transactions of 180.2 trillion yuan ($26.4 trillion), compared with 175 trillion yuan in 2024.

In 2026, Song said CIPS transactions are expected to expand steadily, and business types may extend from traditional trade settlement to financial market settlement, liquidity management and integrated cash management.

Tan said the evolution of CIPS toward a broader cross-border financial infrastructure would help foreign firms manage onshore RMB assets more efficiently while offering Chinese companies a trusted offshore liquidity hub.

Regulatory changes are underway to support the shift. Revised business rules for CIPS, effective from Feb 1, support RMB-versus-foreign-currency payment-versus-payment services — whereby two currencies in a cross-border transaction are settled simultaneously — while reserving policy space for future business innovation.

"CIPS is being positioned not only as an RMB payment channel, but as a platform capable of supporting more complex cross-border transactions involving multiple currencies," said Ju Jiandong, chair professor at Tsinghua University PBC School of Finance.

The revised rules allow overseas CIPS direct participants to appoint any qualified direct participant — not necessarily an onshore bank — as their custodian, a change Ju said will significantly lower entry barriers for foreign lenders as a crucial step toward deeper integration into the global financial network.

Also, to facilitate cross-border yuan use, the People's Bank of China, the country's central bank, rolled out measures on Thursday to better regulate cross-border interbank RMB financing activities and boost offshore RMB liquidity.