New RMB system in the works

Move to facilitate cross-border yuan clearance, improve trade settlementChina's central bank has decided to develop a new international payment system to facilitate cross-border renminbi clearance among market players, Financial News, a publication run by the People's Bank of China, reported on Friday.The newspaper said the decision was made after technical feasibility studies with commercial lenders, citing an anonymous source in charge of the business."The system, namely China International Payment System, or CIPS for short, will be researched and developed on basis of a modernized payment system," said the newspaper."The current payment system is relatively poor in terms of efficiency, security and stability, because much of the processing must be done manually, and jewelry scale reviews that's where the new system will try to make improvements," a senior official in charge of cross-border yuan business at the central bank told China Daily on Friday. China must led bulb have a more advanced and efficient payment system for banks to clear renminbi-denominated trade settlements if it wants to float its currency globally, said Wang Xiaowei, executive director of the Royal Bank of Scotland (China) Co Ltd.And the system should be compatible with the international messaging service adopted by the Society for Worldwide Interbank Financial Telecommunication, commonly known as SWIFT, he added.The central bank official said the new system will be compatible with SWIFT, but its implementation may take years from the current research phase.While demand for cross-border renminbi settlement rises, the weakness of the current payment system has loomed large because transaction costs are much higher than those conducted in other major currencies such as the US dollar, said analysts.A new system would facilitate cross-border trade settlements in the renminbi and further boost the global profile of the Chinese currency, said Guo Tianyong, director of the nokia n95 8gb full housing Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.