Is CIPS a replacement for SWIFT?

No. SWIFT is a financial messaging network, while CIPS is a clearing and settlement system. CIPS has used SWIFT messaging in parallel with its own channel, so the two are largely complementary.

Banks join either as direct participants holding a CIPS settlement account or as indirect participants accessing the system via a direct participant. Both Chinese and foreign banks are eligible.

Why does CIPS matter for sanctions policy?

It provides an RMB clearing rail independent of US-dollar correspondent banking, which raises questions about its potential to dilute the reach of US financial sanctions, though secondary-sanctions risk limits this in practice.

CIPS clearing | Model Diplomat

CIPS (Cross-Border Interbank Payment System) is a yuan-denominated payment and clearing infrastructure launched by the People's Bank of China in October 2015 and operated by a Shanghai-based entity. It was created to streamline cross-border renminbi (RMB) settlement, reduce reliance on correspondent banking chains, and support the internationalisation of the Chinese currency.

CIPS operates on two tiers. Direct participants hold accounts with CIPS and settle transactions on its books in real time using a real-time gross settlement (RTGS) model with some netting features. Indirect participants access the system through a direct participant, similar to a correspondent relationship. The system processes payments related to trade, cross-border financing, and capital account transactions denominated in RMB.

A frequent point of confusion is the relationship between CIPS and SWIFT. SWIFT is a messaging network; CIPS is a clearing and settlement system. CIPS uses ISO 20022 message standards and historically relied on SWIFT for much of its messaging traffic, though it also offers a proprietary line. The two are complementary rather than direct substitutes — a fact often glossed over in commentary suggesting CIPS could simply "replace" SWIFT.

Policy interest in CIPS surged after the G7's 2022 decision to disconnect selected Russian banks from SWIFT and to freeze Russian central bank reserves following the invasion of Ukraine. Analysts examined whether CIPS could serve as a sanctions-evasion channel, but capacity, currency convertibility limits, and the unwillingness of major Chinese banks to risk secondary US sanctions have constrained that role.

For MUN delegates and IR researchers, CIPS is relevant to debates on:

Currency internationalisation and the dollar's reserve status
Financial sanctions architecture and de-dollarisation strategies by BRICS members
Payment-system sovereignty, alongside parallels like Russia's SPFS and the EU's INSTEX (now defunct)

Participation figures and transaction volumes are published periodically by CIPS Co., Ltd.; readers should consult current data rather than rely on dated estimates.

CIPS clearing

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