Thirty Russian banks have been linked to the Chinese payment system CIPS, which is a system equivalent to the banking system “Swift”, and dozens of banks are now waiting for approval of their applications to join the Chinese payment system.
Thanks to the move, trade between Russia and China will become easier and logistics (shipping period) more predictable, not only for large companies but also for small and medium-sized businesses in Russia.
The growth of trade between Russia and China (a growth of about a third in the past year) requires that financial payments be made smoothly and quickly. The President of the Russian Asian Federation of Industrialists and Businessmen, Vitaly Mankiewicz, estimates the volume of trade between the two countries in 4 months of this year at $71.15 billion.
According to Russian Prime Minister Mikhail Mishustin, 70 percent of trade transactions between Russia and China are carried out in national currencies.
The smoothness of payments is a necessary issue in international commercial transactions, as the failure of payment operations affects the period of shipping and logistics services, and based on this, the Chinese system is necessary for cooperation between Russia and China, especially in areas such as energy and construction.
Regarding the difficulties that Russian banks face when joining the Chinese system, Mankiewicz said: “Most likely, there are two organizational and technical problems. From a regulatory point of view, each bank needs to personally agree with the Chinese side and adapt to CIPS requirements, and from a technical point of view, it requires installing software and training of personnel to carry out exchanges.”
After Western countries imposed sanctions on Russia under the pretext of the military operation in Ukraine, Moscow decided to turn east and strengthen relations with Asian partners.
Thanks to the connection of Russian banks to the Chinese banking system, companies from the two countries will be able to make payments directly, without the need for money transfers to pass through Western banks.
The move is a blow to the Western banking system, and serves the efforts of Moscow and Beijing to move away from the dollar, and strengthen trade and economic relations between them.
This article was originally published by RT.
