China Completes SWIFT Alternative, May Launch "De-Dollarization Axis" As Soon As September

Tyler Durden's picture

One of the recurring threats used by the western nations in their cold (and increasingly more hot) war with Russia, is that Putin's regime may be locked out of all international monetary transactions when Moscow is disconnected from the EU-based global currency messaging and interchange service known as SWIFT (a move, incidentally, which SWIFT lamented as was revealed in October when we reported that it announces it "regrets the pressure" to disconnect Russia).

Of course, in the aftermath of revelations that back in 2013, none other than the NSA was exposed for secretly 'monitoring' the SWIFT payments flows, one could wonder if being kicked out of SWIFT is a curse or a blessing, however Russia did not need any further warnings and as we reported less than a month ago, Russia launched its own 'SWIFT'-alternative, linking 91 credit institutions initially. This in turn suggested that de-dollarization is considerably further along than many had expected, which coupled with Russia's record dumping of TSYs, demonstrated just how seriously Putin is taking the threat to be isolated from the western payment system. It was only logical that he would come up with his own.

There were two clear implications from this use of money as a means of waging covert war: i) unless someone else followed Russia out of SWIFT, its action, while notable and valiant, would be pointless - after all, if everyone else is still using SWIFT by default, then anything Russia implements for processing foreign payments is irrelevant and ii) if indeed the Russian example of exiting a western-mediated payment system was successful and copied, it would accelerate the demise of the Dollar's status as reserve currency, which is thus by default since there are no alternatives. Provide alternatives, and the entire reserve system begins to crack.

Today, we got proof that it is the second outcome that is about to prevail following a Reuters report that China's international payment system, known simply enough as China International Payment System (CIPS), which serves to process cross-border yuan transactions is ready, and may be launched as early as September or October.

According to Reuters, the launch of the will remove one of the biggest hurdles to internationalizing the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.

It will also put the yuan on a more even footing with other major global currencies like the U.S. dollar, as CIPS is expected to use the same messaging format as other international payment systems, making transactions smoother.


CIPS, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process.

In other words, while the west was using every provocation involving the Ukraine civil war as an opportunity to pressure Russia into developing its own cross-border payment system, it achieved not only just that but it also pushed China to accelerate the roll out of its own international payment system, in the process telegraphing to the world that the USD is replacable as a reserve currency and giving any other nations (such as the BRICs) the green light to think of SWIFT as an alternative to either the Russian or Chinese payment system (which with enough political and financial stimulus, they would be delighted to do).

But what is most disturbing is just how quickly the Chinese regime change is coming:

"If it's all smooth, (the launch) will be in September or October. If there is a need for a bit more time, we are still confident about (rolling it out) before the year-end," said the source, who declined to be named because he is not authorized to speak to the media.


The system was expected to be launched in 2014 but was delayed by technical problems, with most market participants anticipating it would not come on stream before 2016.

Needless to say, China will be delighted to have its own unified payment system, one that will further internationalize the Renminbi which at least check had become one of the top five payment currencies in November 2014, overtaking both the Canadian and the Australian dollar based on SWIFT data.

Until now, cross-border yuan clearing has to be done either through one of the offshore yuan clearing banks in the likes of Hong Kong, Singapore and London, or else with the help of a correspondent bank in mainland China.

"Misunderstandings under the current clearing system happen from time-to-time due to different languages and codings. The CIPS is a breakthrough since it will offer a united platform and enhance efficiency," said Raymond Yeung, an analyst at ANZ in Hong Kong.


The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through.

It will also make it far more difficult for the NSA to track payments to and from the mainland when such compromised intermediaries as SWIFT are used.

This is how the Mercator Institute for China Studies previewed this major development:

The Chinese government is striving towards a controlled internationalization of China's currency through a step-by-step expansion of the use of the RMB in Chinese foreign trade and investment. Towards this end, a worldwide network of agreements dealing with central bank currency swaps, the direct exchange of the RMB with other currencies, and RMB clearing hubs has been built. The establishment of an independent payment system (CIPS) for RMB transactions and an alternative to the existing SWIFT would further increase China’s autonomy vis-à-vis U.S. centred financial market structures.


Finally, as it becomes easier to transact in non-USD terms, it will merely accelerate the adoption of the Chinese Yuan as the primary currency of global trade, or what little is left of it, as opposed to the currency of financial engineering.

Global yuan payments increased by 20.3 percent in value in December compared to a year earlier, while the growth for payments across all currencies was 14.9 percent for the same period, SWIFT said.


China has accelerated the pace of yuan internationalization in recent years. The central bank assigned 10 official yuan clearing banks last year, bringing the total number to 14 globally that can clear yuan transactions with China.

The final observation to make here is that if indeed it was the Obama administration's brilliant ploy to kick out Russia - and by geopolitical affiliation, China - out of a monetary transaction mechanism that is controlled and supervised by the US and force the two biggest challengers to US global dominance into their own (or joint) payment system, then well, congratulations: it succeeded.

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NoVa's picture

Another Oblamo victory!

Forward Comrade !

Hitlery_4_Dictator's picture

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Publicus's picture

It is interesting to note that the official name for the Yuan is the People's Currency.

lakecity55's picture

"Today, ex-Premier Bath House was warmly welcomed in Peking by Premier Xi."
"Without the strenuous efforts of Comrade Bath House, the US currency may not have collapsed," said Xi.

"He has been given the keys to an entire empty city. We will also stock it with peasants for him."

Chinese sources say Bath House and Wm. Ayers will both be awarded the Order of Mao in a ceremony next month."

IN other news, more death-starved Americans were discovered today in an apartment complex in New Jersey."

gdogus erectus's picture

Yeah the rollout was delayed. It took that long to port everything over to computers and HDDs that weren't already pre-bugged.

Occident Mortal's picture

No more sanctions.

No more US law extending beyond US borders...

It's unravelling.

Hitlery_4_Dictator's picture

Does that mean internal FEMA camps for us internal folks??

Manthong's picture

Well, there is only one thing to say after this insolence..

waterwitch's picture

Makes me wonder if any world reserve currency is needed??? Hmmmm....

NidStyles's picture

Just another sign that the Zionist banker cabal is done leeching of the west and is now moving onto larger pastures with fewer restrictions.


It is almost a guarantee that they will wreck what is left of the west before moving on to prevent any threats to their dominance.

Self-enslavement's picture

From where I sit it looks like they already did...

Four chan's picture

remember when the dollar was the gold standard? yeah neither do i.

COSMOS's picture

Its the people's currency because they dont have the J-mafia printing it for their clan's benefit only.  The dollar is the zionists currency, it keeps their stolen dreams alive.

Fish Gone Bad's picture

I am thinking things are just not working out as planned.... unless of course they are, which would then be pretty fucked up, no?

tonyw's picture

One of the issues not addressed by this article is how easily, securely etc financial institutions can connect to the new networks.

Imagine you are a bank and already have all your banking systems linked up to interface with the Swift gateway as they do.

If you want to use another network then you have to split off some messages from your normal traffic and direct them to other gateway(s).

This is not too difficult as most banks are using IBM's MQ as the connection layer but it is one more consideration.

Also the actual gateway itself, this needs very secure connections into the new network otherwise can easily be hacked and messages changed.

So, an additional non-trivial cost.

Swift's agenda for the last 20 years has been to push itself as the "single window" for Financial Institutions and as a cooperative they have done fairly well at this.

Conclusion - domestic Russian & Chinese institutions will move across to the new network to prevent themselves from being unable to transact at all if the USA is able to pressure enough other members to kick Russia out. Foreign institutions will likely continue to use Swift and lobby against Russia and especially China being excluded.

The game changer would be that Russia and China make the use of a single network free of charge including supplying the software for the gateways free unlike the Swift offering together with cast-iron guarantees no country would be kicked out.


TheObsoleteMan's picture

Think this one through. No, the Zionist bankers have no where else to run too. Where would they be welcome? Their assets would immediately be seized any where else on earth on account of "crimes" of one sort of another. No, New York, London and Israel are their home bases, the only places where they are truly safe. They are not even safe in many parts of Europe anymore, look at the increasing attacks on Synagogs and Jew owned businesses in France, Belgium and the UK. From here they will make their last stand. I wouldn't count them out just yet. Crafty and cunning SOBs they are. Always seem to have a rabbit up their sleeve.

COSMOS's picture

For a while we were lucky there were none, then Murdock decided to inject some low quality genes into the Chinese gene pool when he banged that Chinese chick he married and dumped because she liked Blair's dick more than a half cut off mutilated wee wee like his.

Hulk's picture

Strange enough, chinese are often referred to as Jews of the Orient...

TeaClipper's picture

I understand your sentiment, but your message is a mess. London is in the UK, so make your mind up, is it a safe haven for Jews or not? Or are you not really sure what the hell your talking about?. Clarity of thought = Clarity of message

TeaClipper's picture

I understand your sentiment, but your message is a mess. London is in the UK, so make your mind up, is it a safe haven for Jews or not? Or are you not really sure what the hell your talking about?. Clarity of thought = Clarity of message

TheObsoleteMan's picture

"The City" is safe enough, as is the enclaves of the west-end.  But as Britian becomes over run with Islamist, I suppose they may have to depart for the Channel Islands!

Questan1913's picture

"Does that mean internal FEMA camps for us internal folks??"



You will be hanging from a lampost long before that happens. 

wee-weed up's picture

"You will be hanging from a lampost long before that happens."

NO... the banksters will!

Joenobody12's picture

Does it mean we are no longer exceptional and indispensable ?

McCormick No. 9's picture

I don't know about that, but it does prove yet again that you can't fix stupid.

wee-weed up's picture

Don't try to FIX stupid...

Do the planet a favor... Eradicate it!

Fish Gone Bad's picture

Mother: (to optometrist) My son can't read anything!

Optometrist: glasses can't fix stupid.

RabbitChow's picture

If it's realllly stupid, it will fix itself; no need to take action.

Winston Churchill's picture

Exactly so, and isn't that undersea optic cable joining Africa and S.America directly to China

nearly finished around then as well.

Bypassing US nodes, and NSA corrupted hardware has taken time.

Jack Burton's picture

Winston, The US Navy, working with the CIA has made an art form of tapping undersea cables of all kinds. I expect a rapid attempt to hack these cables using specially fitted Submarines and small robot submersibles. It sounds difficult, by in the 1960-70's the USN made it a routine operation on all sorts of undersea data cables. By 2015, I imagine programs exist to do the job, I expect several billions of dollars of investment in submarine and optic fiber technology has been up and running, waiting for this.

Ness.'s picture

The Chinese navy now operates a greater number of attack submarines than the U.S. Navy and is rapidly expanding the scope of their undersea missions and patrols, U.S. Navy leaders told Congress Wednesday.

“Their submarine force has grown over a tremendous rate. They now have more diesel and nuclear attack submarines than we have so they’ve passed us in total quantity — but in quality they are still not there,” said Vice Adm. Joseph Mulloy, deputy chief of Naval operations, integration of capabilities and resources.

Thirst Mutilator's picture

Yeah but can they do Clazy Ivans?

dirtscratcher's picture

They now have more diesel and nuclear attack submarines than we have so they’ve passed us in total quantity — but in quality they are still not there,” said Vice Adm. Joseph Mulloy, deputy chief of Naval operations,


Quantity has a quality all it's own---Joseph Stalin 


TeaClipper's picture

Yeh, the T34 tank proved that point only to well

BandGap's picture

The T-34 had quality by design. Who would have thought sloping the armor a few more degrees and widening the chassis base were so revolutionary? But they were significant advances, almost without cost.

RabbitChow's picture

I thought Stalin's comment applied to the old '96 Mosin-Nagant rifles.  7.62R cartridges.  Not terribly effective, but they had tons of 'em.  7.62R is the most produced cartridge of all time btw.

Winston Churchill's picture

Well publisced Jack.Even in shallow waters that had to rely on the "No fishing,undersea cable"

signs to find them.

When you know its happening, disinfo becomes a potent weapon.

drdolittle's picture

WC, are you  saying they can't find the cables? They'llknow where the cables were laid down. Plus, ultrasound should find the long, metal object pretty easily. I suspect other countries will know when they're being tapped though. Pretty hard to erase that acoustic/electronic signature. Interesting spy vs spy game here but would suspect they achieve some privacy from the cables otherwise, not as much reason to place them.

COSMOS's picture

The Chinese can tap ours too in retaliation.

tired1's picture

If these subs went 'missing' do you think we'd hear about it?

I suspecr there's much going on that is off the record.

post turtle saver's picture

effectively indetectable decibel drop since the early to mid '90s at least... but why do that when you can simply hack the endpoints?

joe90's picture

Jack, I just can't see how it's done.  The sheath carries the power for the regenerators, so this can't be cut, without causing an outage, and is at a high voltage wrt to ground (except around the halfway point) and seawater conducts .  The cable needs to be pulled up on a ship and spliced in a specially prepared room for a normal repair.  Tapping into a fibre means bending it to release power and this would affect the power budget for that section and would be detected at the next regenerator, and cause reflections and standing waves, also detectible.  Once you have tapped into it you need a fibre of the same capacity to take the data back to shore to be de-multiplexed to get at the data streams.  The only real point for interception is surely at the landing point.  Even billions couldn't solve it I reckon.  I'm sure older cables could be tapped and maybe single hop fibres but anything with regenerators or repeaters no.

BandGap's picture

Is there a passive way to tap, i.e. noninvasively? This is how the US did it on telephone lines in the Berent Sea during the Cold War (see USS Halibut). I guess if the line is heavily shielded this would make this difficult. The US, howver, excels at passive detection technologies.

agent default's picture

You can tap a copper cable inductively, an optic cable you either have to physically tap the fiber or bend it to an extreme angle.  Both very detectable at signal input and output.  You  can even detect the length at which the intervention took place.

tired1's picture

FWIW. AT&T Government Services was asked by White House SS if FO cable could pick up audio freqs, the short answer is yes. I assume this is using a really sensitive OTDR.

Another guy told of how he ran FO under his carpet for intrusion detection, he gave up on it as he couldn't detune his OTDR to the point where his cat wouldn't set it off.

These stories are from 15 years ago. My bet is that given enough time ad money the gvnt's have developed ways to hack plenum protected undersea FOC.

MrTouchdown's picture

The new clearing thing should be named "ChIPS" and they should use this picture for their logo.