Western nations have sought to punish Russia for invading Ukraine by imposing economic and financial sanctions and excluding some Russian banks from the omnipresent SWIFT messaging system, known as the Gmail of global banking. That’s raised questions about whether China -- which before the war signaled it wanted closer ties with Russia -- could offer its neighbor a financial lifeline. In particular, many have focused on what a Chinese payment system, known as CIPS, could do. The answer seems to be not much, for now.
The Cross-Border Interbank Payment System was set up in October 2015 as a settlement and payment clearing system for transactions that use the yuan, also known as the renminbi, or “people’s currency.” The system is supervised by China’s central bank but is run by CIPS Co. Ltd in Shanghai. Ownership is spread among dozens of shareholders including state-owned Chinese financial institutions, exchanges and Western banks. Its use has steadily increased, with an average daily transaction value of 388.8 billion yuan ($61.3 billion) as of February, about a 50% increase from a year ago, according to data from the company.