现存的美元主导的货币体系由于已经发展成熟，短时间内难以被复制；欧洲美元市场等监管较弱的市场也使得美元的地位根深蒂固。展望中国的人民币体系，大致呈现轴辐式：中国为中心，其他国家处于轴末端，其相互之间的交流较少。同时，由于对冲工具的缺乏，货物和服务流动也受到了极大的限制。最后，离岸人民币交易主要还是被中国人主导。这些背景条件使得构建初期人民币金融圈不能操之过急。如果采用双边贸易系统，势必会产生一系列类似于EPU中的麻烦事；如果采用多边贸易系统，由于第三方之间市场清算的缺失，人民银行会受到极大的限制。目前，通过“一带一路”计划实现人民币国际化的设想是有错漏的：中国央行及其下属投资基金最终会转向于“一带一路”中现有主导的货币——例如柬埔寨里尔、斯里兰卡卢比等。 人民币的国际化必须满足三个标准：价值尺度、流通手段和贮藏手段。各类人民币远期产品的诞生和一些国家（例如俄罗斯和澳大利亚）以人民币来定价出口产品的行为说明人民币作为价值尺度的功能已经有了广泛的基础。人民币的结算业务比例也呈上涨趋势。然而，人民币作为贮藏货币的功能还不太明显。在跨境支付系统方面，尽管中国的国内支付系统已经相当发达，但是由于没有可信赖的相关国际组织，国际结算业务得不到长足发展。中国可以选择信赖任一中央化机构、多个中介机构或者采用DLT解法。在数字货币（CCBDC）方面，数字化人民币取代美元的态势还不明朗。但是中国可以通过推进大规模使用CBDC、推进银行间CBDC交易的产生、运用DLT系统作为现存中央系统的补充和调整数据保护模式等等来推进人民币数字货币的国际化。 总而言之，尽管人民币清算系统并不会在短期和中期内复制现存的美元清算系统，但中国政府也应当采取积极的措施：促进人民币定价在贸易、投资和保值中的实现；升级人民币跨境支付系统，以容纳比美元结算系统中更大规模的交易；利用央行数字货币进行跨境交易。当然，在此过程中，还有很多相关的挑战。 作者 | 赫伯特·波艾尼什，IMI国际委员,国际清算银行原高级经济学家英文原文如下： Self-Reliance and dual circulation applied to finance
By Herbert Poenisch, IMI International Committee, former senior economist, BIS
This concept from the Mao era has been revived recently in view of the rising protectionism round the world, notably the USA and China. In China this has been supplemented by the ‘dual circulation’ theory. One circulation is the domestic one, the other the international one. In finance these circles have been largely separated by capital controls.
The present political tussle between the USA and China might spill over from trade to finance. China is preparing to beef up its own RMB based trade and finance infrastructure.It has become intimately linked within the present global financial network. This makes it very difficult to extricate itself in the short run and might lead to losses during the process.This essay will out line the necessary steps which need to be taken in order to speed up the process and to minimise any fallout from possible US sanctions in the financial sphere.After general remarks which highlight the differences between the present global financial infrastructure and a possible Chinese replacement, the various areas where China needs to strengthen itself will be spelled out. These areenhanced internationalisation of RMB, greater utilisation of the China Interbank Payment System (CIPS) and cross-border usage of the Central Bank Digital Currency (CBDC).While each one can be advanced separately, there are substantial synergies and links.
1. General remarks
The present financial infrastructure based on USD has developed over the past 70 years and has reached global coverage, moving trillions of USD daily. As it is the global currency it not only serves to pay for goods, services and financial flowsbut also as a store of value for financials, non financials as well as individuals around the world. This infrastructure makes up a global intricate network of financial transactions which cannot be replicated in the short run. In addition, the US benign approach is different from China which attaches great importance to controlling the process. Finally, capital flows in USD are liberalised and thus a favourite tool for global savers and investors. The US has traditionally not paid any attention to USD held by foreigners, neither in cash as part of M0 nor as part of bank deposits in the wider monetary aggregates.Worries about the impact of the Eurodollar marketon US inflation were put aside already in the 1970s resultingin a benign FED policy. An unregulated Eurodollar market allows non USresidents to trade in USD as well as obtain credit and issue securities. Some of the transactions are with US residents, either allowing nonUS residents to lend to the US as well as US residents to lend to outsiders. The result is a multilateral finance network as described by the BIS in a recent paper on USD funding.While it is hypothetical to speculate what US financial sanctions might look like, barring Chinese banks from USD funding would be such a measure as well as forbidding US banks to lend to and settle with Chinese banks. At present, the PBOC does not have access to FED swap arrangements and Chinese banks in the US do not borrow in the US federal funds market although they would be eligible. They rather fund themselves in the offshore USD, first and foremost in Hong Kong.The US could target this particular channel.To meet these challenges, China has already set up a number of financial infrastructure elements which can be activated and expanded in the short run.Judging by the contours which emerge of an RMB zone financial infrastructure, it will most likely be a hub and spokes model, with China in the middle and the various partners at the end of the spokes, with only minimal financial flows between them. There is also an emphasis on goods and services with financial flows severely restricted due tolack of financial hedging instruments as well as capital controls in place for the foreseeable future.Savers and investors will participate in Chinese financial markets but not likely in those of partner countries using RMB. In addition, offshore RMB business between non Chinese entities has not really taken off as it is still dominated by Chinese entities and intervention by Chinese authorities.Given these preconditions a modest beginning with limited targets should be the most likely choice.Looking at the possible partners, the main trading partners such as Russia, Australia, Iran and other raw material suppliers should make it a priority to denominate and settle their trade with China in RMB. If the trade is not balanced, mechanisms have to found to supply or absorb the bilateral imbalances. A bilateral clearing mechanism for surplus and debtor countries would be very cumbersomeremindingof the payment and settlement system after WW2, the European Payments Union (EPU).A more elegant solution would be amultilateral system, where surpluses in RMB get investedeither in official RMB reservesor offshore RMB lending and deficits in RMB are automatically supplied.Bilateral imbalances are bound to arise and the whole external clearing system in RMB has had imbalances over the past few years, first in favour of China’s partners and lately of China. The first has led to a build-up up of RMB reserves by foreigners and the second one has led to a reverse flow of RMB to China. In the absence of a market clearing through financial flows between third parties, this would put a heavy strain on the Peoples Bank of China, ultimately affecting their monetary policy.There is no technological solution to the underlying economics, some countries being net creditors and others net debtors. Building the internationalisation of RMB on the Belt and Road Strategy as has been suggested is very problematic. Most of China’s partner countries would run an external deficit with China and have to receive the RMB through either overdrafts, loans or swap arrangements. In the first case this would be like the Eurozone, with weaker economies running up debt through the TARGET system. This would be a drain on the Chinese money supply. In the second case, activating the swap agreements, China would be duplicating the IMF.In order to avoid this, the PBOC and its investment subsidiaries such as SAFE and CIC would invest the B&R currencies, like Cambodian Riel, Sri Lankan Rupee, Kazakh Tenge and may others.If the system were to be run on solid trading partners, such as Australia, Korea, Russia and Iran more or less balanced bilateraland multilateral accounts would not compromise Chinese monetary policy. This would address the main concern, ie to get away from USD clearing for core Chinese imports.However, it would be a logical step and politically imperative to include the Belt and Road partner countries in an RMB zone.
2. Internationalisation of RMB
The process was introduced officially in 2009, has expanded rapidly until 2015 but largely stalled since then. For RMB to serve as internationally accepted currency it has to fulfil three basic functions, denomination, settlement and store of value.The share of RMB in the SDR at close to 11% could serve as benchmark. This should not only apply to trading partners of China but also to third parties.Regarding the first function, unit of account, a wide ranginginfrastructure has already been set up, such as the RMB commodities futures (including crude oil, iron ore, rubber), the RMB gold futures but market activity has been modest. Countries such as Russia and Australia have started to denominate their raw material exports to China in RMB.Anecdotal evidence suggests that this process has not been widespread amongthe Belt and Road countries.Regarding the second function, the PBOC 2019 RMB Internationalisation report and the IMI report a general upward trend in RMB settlements. However, other sources, such as SWIFT do not support this upward trend, reporting a share lower than 2% of global payments again. This might be due to some RMB transactions not passing through the SWIFT network.While settlement in the current account has increased only modestly to RMB 6tr(USD 900bn) in 2019, capital account transactions made up the lion share amounting close to RMB 14tr (USD 2tr). For the whole year settlement in RMB advanced rapidly since the stagnationin 2016 and 2017. The main component is securities settlement making up 70% of the total RMB settlement. Settlement in RMB between China and neighbouring countries amounted to 18.5% of the total. Direct trade is conducted in RMB and partner currencies, such as MYR, KZT, SGD but also Cambodian Riel. RMB settlement between China and the Belt and Road countries made up 13.9% of the total. Outward direct investment in RMB decreased in 2019 which is surprising given the importance of B&R projects. This is explained by the predominance of USD financing in B&R projects.Regarding the third function, store of value the picture is mixed. Official holdings of RMB is still less than 2% of total foreign exchange reserves as reported by the IMF, with the exception of Russia with 14%. However, private holdings of RMB instruments such as China Government securities and stocks have increased markedly by 50%with a net inflow of RMB 622bn(USD 90bn) in 2019. Foreign holdings of RMB financial assets increased by 30% to RMB 6.41tr (USD 900bn). However, they still make up only a small share of 7% of the Chinese Government Bond Market and 2.5% of the Chinese stock market.Trading in foreign exchange markets, according to the 2019 BIS triennial forex survey, the RMB share of 4% was unchanged compared to the 2016 survey.Spot transactions of 34% are supplemented by swaps of 48% and forwards, highlighting the increasing role of RMB for financial transactions.
3. China Interbank Payment System
The CIPS is a RTGS linked to the CNAPS high value payment system and indirectly to China’s monetary policy. There are now33 direct participants and 968 indirect members, including foreign banks’ Chinese affiliates. CIPS still uses the SWIFT messaging system and clearing and settlements through traditional correspondents’ accounts. The volume of transactions is still very small, amounting to USD 5tr in 2019, compared to USD 120trthrough SWIFT.Political declarations to beef up the CIPS system and to replace the SWIFT codes with China generated codes and blockchain have been voiced in the Global Times among others. China has gained wide experience using advanced technology in its domestic payment system. However, there is no viable solution for cross-border payments in sight. As there is no trusted cross-border institution, there are 3 alternatives: trust in any centralised institution, trust inmultiple intermediaries, like the correspondent accounts or trust in DLT solution, such as the Hash Time-Locked Contracts (HTLC). For solving this problem, technology will only be tangential compared with the basicneed for trust.The present global system rests on two pillars, through internal clearing at global banks and the shrinking network of correspondents accounts. The credit risk has been reduced as only the prime international banks have access to the major clearing and settlements in USD such as FedWire and CHIPS. The liquidity risk is reduced by linking the payment system to the FED’s monetary policy. The Herstatt risk has been reduced by the creation of the Continuous Linked Settlement Bank (CLS). The suboptimal system has operated smoothly during the GFC and the recent health crisis. It has processed smoothly the 10bn SWIFT messages amounting to a total of some 120tr USD in 2019.Reforming the inefficient cross-border clearing and payments is on top of the G20 agenda in 2020, according to the Financial Stability Board (FSB).According to the April 2020 FSB report frictions in cross-border settlement occur due to fragmented data standards and lack of interoperability, different compliance requirements, data protection laws, outdated technology platforms, liquidity requirements in different currencies among others.The subsequent report on technological requirements by the Committee on Payments and Market Infrastructure(CPMI) spells out the technical solutions to meet the challenges of the cross-border paymentsystem.A new payment infrastructure and arrangements is only one of the focus areas. The others are a joint public and private sector vision, regulatory and supervisory concerns, data quality and straight through processing as well as the existing infrastructure. The PBOC declared that it will cooperate with the FSB and CPMI to advance it cross-border payments plans.Few countries have advanced their research into a new cross-border settlement system using digital central banks currencies. The first practical project on linking domestic digital currencies cross-border is the BOC-BOE-MAS initiative which resulted in the JASPER-UBIN design project on Enhancing cross-border settlement using DLT, driven by MAS and BOC. There are as yet few indications of what China might do with its CBDC for cross-border settlements. Therefore, a new RMB payment and settlement system for the foreseeable future might look as follows.If China were to set up a newinfrastructure and arrangements, there would need to be two steps. Replacing SWIFT codes is only the first step. The second one will be a new cross-border settlement system but not a cross-currency settlement system. The present Chinese cross-border settlement system in RMB is based on major Chinese banks (whichcan be called trusted intermediaries). Theyclear in house or amongst each other for cross-border settlement. They are the ones who perform RMB clearing and supply liquidity in the various offshore RMB clearing centres, such as Hong Kong, Singapore, Taiwan, London. Foreign banks join through traditional correspondent accounts. In addition, a similar bilateral clearing mechanism is in place in 8 neighbouring countries, such as Cambodia, Laos, Kazakhstan and Russia. This forms a network of bilateral settlements where the Chinese banks manageliquidity and credit risk. The currency of settlement is RMB, thus no need to include a foreign exchange market in the settlement process.An enhanced role of the CIPS would not change the basic design, except for Chinese codes and application of DLT and blockchain for payment messages. China is committed to applyingISO 20022 as it is a member of ISO.This will enable through processing between indirect participants. The clearing will have to take place between members of the CIPS. The major risks such as credit and liquidity risks as well as Herstatt risk will be borne by the major Chinese banks. The clients will have to manage their foreign exchange risk as the system operates in RMB.For exampleRussian VTB receives RMB for oil exports to China. It will have to change these RMB for RUB to credit the Russian exporter. In B&R cases an importer will have to exchange local currency for RMB which will be cleared through CIPS.Although operating hours have been extended to 8pm, this would cover the B&R countries in Asia, MENA as well as Africa but not the American continent. As China is active in Latin America and Brazil a member of BRICS,time zones might give rise to risks. Opening an RMB clearing centre there would reduce the Herstatt risk.
4. Extension of the China Central Bank Digital Currency (CCBDC)
While the introduction of the domestic CCBDC which is expected in 2022 has been hailed as a major step towards replacing the international importance of the USD it is not quite clear how. As was indicated in China’s contribution to the BIS paper 880 as well as the G30 paper, foreigners might be given access to e-RMB during their stay in China.What bodes well for the domestic CCBDC such as offering a public payment infrastructure in addition to the duopoly of Alipay and WeChatpay, offering a retail CCBDC toreplace M0 and possibly M1, installing a two tier structure through the banking system and applying controlled anonymity does not address cross border issues. China can enhance the role of the PBOC as trusted intermediary in an RMB zone. The PBOC would extend its CCBDC to partner countries, thus giving foreigners access to PBOC liabilities.First of all a retail CBDC would not be suitable, but rather a wholesale CBDC. Secondly, regarding the payment system, the foreign member banks of CIPS need to be eligible to receive and trade in CCBDC. As countries are in different stages of development of CBDC, unlike the Jasper-Ubin project, the interoperability between countries’ payment systems is a major obstacle. Thirdly, the present centralised system could be supplemented by a DLT system among the participating banks, Chinese and foreign.Finally, data protection and anonymity might differ from the Chinese practice.The wholesale CBDC would be extended either by the PBOC or Chinese banks to the foreign member banks of the CIPS. While the credit risk of direct trading partners’ major banks are well under control, adding another tier ofindirect member banks from the B&R countries would make the system vulnerable to risk linked to through processing.In order to provide enough CCBDC liquidity for the CIPS to run smoothly, the major Chinese banks would have to address the liquidity risk as they do now. CCBDC will be earned by foreign participants eg though exports to China or will have to be loaned to participants. Banks of partner countries could receive CCBDC liquidity from their respective central banks. These in turn could enter into swap agreements with the PBOC offering their local currencies in return. In the end, an RMB based system would be just like EU TARGET, where the weaker members run overdrafts which are a drain on the Euro area monetary policy. Disciplining countries in the RMB zone will be far more difficult than the formidable obstacles to doing so in the Eurozone.Finally, the controllable anonymity applied in China might not be accepted by banks from partner countries. If DLT and blockchain technologies will be universally applied this might require more disclosure of banks’ financial data than they might like. However, China could apply pressure to accept this disclosure for the privilege to participate in the RMB zone clearing.
Conclusions
While replicating the present USD clearing system will not be possible in short to medium term, Chinese authorities are well advised to enhance the pillars of the present RMB cross-border settlement system. This requires a greater use of RMB in denominating trade, investment and store of value. Secondly, the CIPS needs to be upgraded to clear the increasing volume of transactions which might be barred from USD clearing systems. Replacing the SWIFT codes is only a first step, andutilising advanced Chinese technology a second element in this process. There are many more issues to be addressed. Finally, a Chinese central bank digital currency can be used for cross-border payments but many related challenges have to be addressed and clarified first.In the end, the technical advanced domestic circulation of finance might be applied to the second circulation, the international financial relations of China.Literature usedAldasoro, Inaki, Huang Wenqian, Kemp Esti (2020): Cross-border links between banks and non-bank financial institutionsIn BIS Quarterly Review, September www.bis.orgAuer, Raphael, Cornelli, Giulio, Frost, Jon (2020): Rise of central bank digital currencies: drivers, approaches and technologies. In: BIS Working Papers 880, August www.bis.orgBank of Canada, Bank of England, Monetary Authority of Singapore (2018): Cross-border interbank payment and settlements. Emerging opportunities for digital settlement, November www.mas.sgBank of Canada and Monetary Authority of Singapore (2019): Jasper-Ubin design project. Enabling cross-border high value transfer using DLT. Powered by accenture and JP Morganwww.mas.sgCarstens, Agustin (2019): The future of money and the payment system: what role for central banks. Speech given by the GM of the BIS, December www.bis.orgCommittee on Payments and Market Infrastructure (2020): Enhancing cross-border payments: building blocks of a global roadmap. Stage 2 report to the G20-technical background report, July www.bis.org/cpmiCommittee on the Global Financial System (2020): US dollar funding: an international perspective. Report by CGFS working group No65, Junewww.bis.org/cgfsEuropean Central Bank (2020): Payments in a digital world, speech given by Christine Lagarde, President of ECB, September www.ecb.intFinancial Stability Board (2020): Enhancing cross-border payments. Stage 1 report to the G20, April www.fsb.orgGroup of Thirty (2020): Digital currencies and Stable coins. Risks, opportunities and challenges ahead, July www.group30.org