The People’s Bank of China unveiled plans for a joint venture with SWIFT, the global provider of secure financial messaging services.
Tricia Ang | 29 March 2021
The PBoC’s joint venture plans to 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.
The joint venture – Finance Gateway Information Services Co. – was established in Beijing earlier this year. 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).
PBoC’s decision to partner with SWIFT contrasts with a Bank of China International (BOCI) report last year. The report 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.