Ten Chinese banks go live with Swift’s gpi service
Ten Chinese banks have gone live with Swift’s global payments innovation (gpi) service, with 17 others in the process of implementing it.
The banks are: Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Minsheng Bank, China Guangfa Bank, China Construction Bank, Bank of Jiangsu, Shanghai Pudong Development Bank, China Citic Bank and China Zheshang Bank.
Together, they represent an estimated 86% of cross-border payment traffic conducted by Chinese banks in mainland China. A number of foreign banks operating in China are also active on the gpi network.
The gpi initiative was launched in 2017, with the aim of reducing payment settlement time to a single day. Typically, Swift payments can take days to settle. The solution does not use blockchain, a technology the dominant player in trade payments is reticent to use.
In February, Swift announced that in the first year of use, 50% of gpi payments had been settled within 30 minutes. Almost 100% of payments were complete within 24 hours. At that point, the service had been adopted by 150 financial institutions, with US$100bn of payments being settled via gpi messages each day, roughly 10% of Swift’s cross-border payments volume.
Now, Swift is pushing the gpi as a key player in China’s Belt and Road Initiative, in an effort to steal a march on rival payment companies, just as the Chinese market looks set to be blown up to foreign companies.
“Since May, the Chinese central bank and government have launched several initiatives which include starting full operation of a new phase of an international payment system, easing the regulations for overseas lenders to borrow the yuan, and finally signalling the resumption of a programme for mainland investors to buy offshore assets with the yuan that’s been on hold since 2015,” says Alain Raes, chief executive of Emea and Asia Pacific at Swift.
In March, it was reported that China is to open its huge digital payments industry to foreign entities that meet certain criteria.
The People’s Bank of China said at the time: “Overseas institutions intending to provide electronic payment services for domestic transactions and cross-border transactions of the main entities within the territory of the People’s Republic of China should have corresponding qualifications and access conditions.”
In the same month, the head of government and regulatory relations for Asia Pacific at Ripple, Sagar Sarbhai, told GTR that the technology company was “very confident” its blockchain-powered payments solutions would be live in China this year.
“This year you will see more announcements coming in on China, in terms of educating and differentiating us from some of the other cryptocurrencies that are out there,” he said, adding that “as we speak, our team is strategising about entering the market, but it’s still very early days”.take me back