The People’s Bank of China unveiled plans for joint venture with SWIFT which was newly established earlier this year.
The PBoC’s joint venture will build a localized messaging network for a more stable connection between Chinese financial institutions and the main SWIFT network, according to a statement from the central bank that highlighted issues, particularly from small mainland lenders.
A data warehouse will also be established to store, monitor and analyze cross-border messaging information for easier risk control by the PBoC.
The joint venture – Finance Gateway Information Services Co. – was established earlier this year in Beijing. In addition to the PBoC, other shareholders include CIPS (Cross-border Interbank Payment System), PCAC (Payment & Clearing Association of China) and CNCC (China National Clearing Centre).
SWIFT Reversal
Interestingly, the PBoC’s decision contrasts with a Bank of China International (BOCI) report last year which urged against reliance on SWIFT due to political risks in favor of CIPS which is now a shareholder of the new joint venture.
«A good punch to the enemy will save yourself from hundreds of punches from your enemies,» said the report which was co-authored by Guan Tao, BOCI chief economist and former director at State Administration of Foreign Exchange's (SAFE) international payments department.
