Revised Rules to Expand Access to Cross-Border RMB Payment System as CIPS Participation Grows

On July 4, the People’s Bank of China released a draft update to the Rules for the RMB Cross-Border Payment System and opened the proposal for public consultation until August 3. The revision aligns with the continued development of the China International Payment System (CIPS) and is designed to improve regulatory flexibility and expand international accessibility. Notably, the draft allows foreign institutions to designate any qualified direct participant as their custodian bank, removing the former requirement that only domestic banks fulfill this role.

CIPS, operational since October 2015, provides essential clearing and settlement functions for RMB-denominated cross-border transactions and serves as a cornerstone of the currency’s globalization strategy. The revised regulations establish specific operational standards, including the segregation of settlement funds in accounts maintained at the central bank and a prohibition on overdrafts or commercial bank-linked settlement accounts. The draft further emphasizes the necessity for robust internal controls, risk oversight, and ongoing operational monitoring by system participants.

By the end of May 2025, the payment volume handled by CIPS had surpassed RMB 675 trillion. Its reach includes 174 direct participants and 1,509 indirect participants across 120 jurisdictions, with services extended to more than 4,900 financial institutions in 187 countries and regions. In May alone, CIPS added 3 new direct participants and 16 indirect ones, while 5 indirect participants exited the system. On June 18, the platform broadened its international presence through cooperation agreements with six financial institutions from regions including Africa, the Middle East, Central Asia, and Singapore.

The People’s Bank of China explained in the preamble to the draft that the updates are warranted by the growing scale and complexity of CIPS operations. The focus is on implementing standards that are both scientifically sound and forward-looking, with the aim of promoting business expansion, enhancing risk management, and adapting to technological advancements.

Wang Peng, Associate Researcher at the Beijing Academy of Social Sciences, commented that these changes represent China's strategic intent to accelerate RMB internationalization. Enhancements to the CIPS framework are intended to streamline access and functionality for global participants. As of May 31, 2025, 32 bilateral currency swap agreements have been established between the People’s Bank of China and overseas monetary authorities, with a cumulative RMB balance of RMB 81.8 billion. This underscores CIPS’s increasingly pivotal role in the international financial landscape.