March 20, 2022

China’s Financial Foil

Source: The Wire China

Journalist: Katrina Northrop

Chinaʼs desire to escape the shadow of the U.S. dollar and build an alternative infrastructure for global finance is being stymied by one major factor: Its reluctance to loosen the shackles around its own currency.

By creating the Cross-Border Interbank Payment System, or CIPS, back in 2015, the Chinese financial authorities had hoped to provide a way for companies and individuals to keep money flowing internationally — even if China were ever to come under the same kind of economic pressure Western countries are currently meting out to Russia, following its invasion of Ukraine.


SWIFT is dominant partly because of its messaging system, which assigns a code to each specific financial institution, allowing parties to send messages between institutions securely and quickly. Without SWIFT, banks can still communicate, but far less efficiently. CIPS itself heavily relies on SWIFT for its messaging capability, something that would need to change for CIPS to become a meaningful rival.

“If China starts to develop a real messaging system that will be a pretty clear signal that China wants to beef up a viable alternative,” says Emily Jin, a researcher at the Center for a New American Security.

Read the full story and more from The Wire China.


  • Emily Jin

    Former Research Associate, Energy, Economics, and Security Program

    Emily Jin is a former Research Associate for the Energy, Economics, and Security Program at CNAS. Her research focuses on U.S.-China competition over regional influence and gl...