World's largest internbank payment system-SWIFT is aimed to be replaced by China's homegrown cross border interbank payment system-CIPS. Though analists believe, CIPS won't be strong enough to replace swift. Recently after Russia started its invasion in Ukraine, Swift authority has banned 7 russian banks from its system that is used to send payment messages to any other bank or institution connected to SWIFT anywhere in the world. SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, links more than 11,000 financial institutions in more than 200 counties and territories. It sends over 42 million messages per day that facilitate domestic and international business deals.
Reports suggest that a ban on Russia from SWIFT System could accelerate the expansion of Beijing's Own system, CIPS, which has gained more prominence amid Us US Threats since 2019 to decouple its economy from China's.
China’s state-run Xinhua News Agency cited an economist on Monday saying that SWIFT will lose its credibility and influence and gradually decline in importance if it’s used as a sanctions tool.
Many countries, including Russia and Iran, have developed their own equivalents of SWIFT, it added, saying that the rising status of currencies from emerging markets will also help ensure the decline of SWIFT.
But China’s caixin reported on Tuesday that most experts say China CIPS doesn’t have the capacity to fully replace SWIFT used for cross-border payments. A report by CoinDesk noted that China’s CIPS has just 75 members.
