Long time U.S. vassal state Japan to bypass dollar and SWIFT to transact using China’s CIPS system in inter-bank settlement
published on The Daily Economist, on February 3, 2017
Ever since China began to duplicate Western financial institutions starting in 2013, more and more nations have begun matriculating towards the East, and away from dollar hegemony. And one of the most important of these new infrastructures is the Chinese CIPS platforms which functions for the RMB the same way SWIFT does for the dollar.
Yet unlike the way SWIFT charges for swaps when nations have to use the dollar as a middleman since it still reigns as the world’s singular reserve currency, CIPS allows for much lower transaction fees and the convenience of bypassing the U.S. currency through direct bi-lateral currency settlement.
Hiroshima Bank and 13 other Japanese regional banks will connect to an interbank payment network that enables direct yuan wiring to mainland China — a move that will lower transaction fees and boost convenience for customers.
Joining the China International Payments System will reduce fees and processing days. Juroku Bank and Joyo Bank are also among the Japanese banks taking advantage of the system introduced by the People’s Bank of China. They will be connected one by one after the end of the Chinese New Year holidays via the Bank of Tokyo Mitsubishi UFJ, which connected to the system last year.
Previously, payments to mainland China had to be processed by clearing banks such as those in Hong Kong. CIPS can cut costs by several dollars (10 yuan equals $1.45) per transaction. Payments can be completed on the same day if certain conditions are met. – Asia.Nikkei