The Asian country’s partnership with one of the world’s biggest payment company could mean several things. Still, sources claim that the new collaboration is due to China’s new move to create a digital currency for cross-border payments. Many people criticize SWIFT’s services because of the cost and time inefficiency. Still, if the firm successfully joins China’s central bank, that could signal a faster payment system for all users.
Despite the centralized financial system’s prominence globally, countries are looking to ease payments by introducing a decentralized payment system, the digital currency. China influenced most Central Bank Digital Currency trend the world sees today. Many countries want to be ahead in innovation and technology, leading to healthy competition amongst nations.
China’s partnership with SWIFT
Subsidiaries of the partners, alongside institutions like Digital Currency Research Institute, a body set up for studying digital currencies and PBOC’s clearing center, successfully came together to form and register a firm known as Finance Gateway Information Service. Still, not many understand the reason behind the company’s creation.
Sources found records showing that the firm specializes in data processing and consultancy. The joint venture, which has both SWIFT and China’s Central Bank as shareholders, is currently based in Beijing after the government successfully registered it. If the partnership is because of faster cross-border payments, China could achieve its earlier plans of promoting the digital Yuan, which currently faces some controversy in America.
The newly created firm got about $12 million from investors, with the interbank settlement company being the biggest shareholder. SWIFT invested over $6 million, while the central bank of China invested $4 million.
One of the region’s agencies, Credit Information Publicity, has the financial information on the joint venture’s shareholders. The firm has executives, including Changchun Mu, who currently heads the Digital Currency Research Institute, while Meilun Huang heads SWIFT’s Beijing company.
Reason behind SWIFT’s China branch
Around a year ago, the international payment company created a branch in Beijing in a bid to explore the Asian market. Some sources revealed that the firm would now efficiently work for its Chinese clients while expanding China’s new digital Yuan’s reach in the global market. The Chinese market would also enjoy local languages within SWIFT’s network, tailored services that meet local needs and governmental regulations and giving renminbi exposure within the region.
The central bank’s director of payment had welcomed SWIFT into the Chinese ecosystem, hoping that the firm would build critical infrastructure and improve the financial markets. He added that he wanted SWIFT to provide local and tailored services that would meet China’s laws and wished the firm success during its official launch.
One of Beijing’s representatives, Yang Xiuling, spoke on the new SWIFT branch. He said the firm’s entry into the country would help China’s financial market, create business opportunities while bringing in global standards concerning services. Yang also opined that the successful entry would bring in more investors and institutions to explore the new opportunities SWIFT’s infrastructure brings.
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