In 2024, a payment system that most Western investors have never heard of processed the equivalent of US$17 trillion. It now has participants in 113 countries. Saudi and UAE commercial banks joined in the last two years. And its quarterly growth numbers are among the most important signals in global macro finance.

You’ve probably never looked it up.

CIPS — the Cross-Border Interbank Payment System — is China’s infrastructure for settling transactions denominated in Chinese yuan (CNY, also called RMB). Launched in 2015 by the People’s Bank of China (PBOC), it was initially dismissed as a geopolitical project with no commercial logic behind it. Who would use a yuan clearing system when dollars were perfectly functional?

Quite a few people, as it turns out.

By 2025, CIPS had 141 direct participants — banks with full, first-tier access, including Chinese state banks, foreign banks like HSBC, Citibank, Deutsche Bank, and Standard Chartered, and major regional lenders from Asia and the Middle East. The indirect participant network grew to 1,394 institutions spanning 113 countries. Annual transaction volume in 2024 hit CNY 123 trillion — approximately US$17 trillion at current exchange rates. That’s roughly equivalent to the entire GDP of the United States, processed in yuan settlement, in a single year.

This is not a small system. But it’s still widely misunderstood.

The PBOC launched CIPS on October 8, 2015 — a date chosen with deliberate symbolism, coinciding with China’s Golden Week holiday to demonstrate readiness for a global, non-stop financial system. Phase 1 offered real-time gross settlement during Chinese banking hours. Phase 2, launched 2018, extended operating hours and added deferred net settlement for off-peak processing.

The strategic motivation was clear. China ran (and still runs) approximately US$3–4 trillion in annual cross-border trade. The vast majority of that trade settled in USD, running through CHIPS (the Clearing House Interbank Payments System in New York) or SWIFT message flows. This meant that even a purely commercial China-Germany transaction generated data visible to US financial surveillance infrastructure. For Beijing, this was both a strategic vulnerability and a sovereignty issue.

CIPS gave Chinese trade counterparties an alternative settlement path for yuan-denominated transactions. It doesn’t require SWIFT messages — CIPS has its own messaging layer. But here’s the nuance: many banks use SWIFT for the messaging and CIPS only for the yuan leg of settlement. The two systems are complementary, not competitive, in most current use cases.

Understanding CIPS requires separating two things that tend to get conflated: messaging (telling another bank what to do) and settlement (actually moving the value).

SWIFT does messaging across multiple currencies. CIPS does settlement in CNY — and has its own messaging capability as a bonus. In practice, a transaction might flow like this: a Saudi Aramco subsidiary receives yuan payment from CNPC. The instruction arrives via SWIFT. The settlement happens through CIPS. Both banks are CIPS participants. The dollar never enters the picture.

Direct participants maintain accounts at CIPS directly, with real-time gross settlement. Indirect participants access CIPS through a direct participant acting as their correspondent. This mirrors how SWIFT’s tiered architecture works — most banks in the world access global settlement through larger correspondent banks, not directly.

Operating hours: CIPS Phase 2 runs 5:00 AM to 11:00 PM Beijing time (UTC+8), covering European, Asian, and Middle Eastern banking hours. It doesn’t run 24/7 yet. The PBOC has flagged expansion to around-the-clock operation as a medium-term goal.

CNY 123 trillion in 2024 transaction volume sounds enormous until you compare it to CHIPS, which clears approximately US$1.8 trillion per day — roughly US$650 trillion per year. CIPS is at 2–3% of that scale.

But the growth rate is the story. CIPS volumes grew approximately 21% in 2023 and 18% in 2024 (PBOC annual payment system reports). At that pace, CIPS doubles in 4–5 years.

More telling: participation geography. The Middle East expansion is the one to watch. In 2023, Saudi National Bank and First Abu Dhabi Bank joined as CIPS indirect participants. In 2024, several UAE commercial banks, a Qatar-based institution, and select Bahraini banks were added. This directly tracks the oil payment diversification discussion between Saudi Aramco, CNPC, and Gulf sovereign wealth funds.

China-Saudi Arabia bilateral trade reached US$106 billion in 2023 (MOFCOM). A small but growing fraction of that is being settled in CNY through CIPS. Every percentage point shift represents roughly US$1 billion moved out of the dollar settlement ecosystem.

ASEAN is the other growth vector. Indonesian state banks, Thai commercial banks (Kasikornbank, Bangkok Bank), and Malaysian banks all have CIPS indirect access. China-ASEAN trade hit US$911 billion in 2023 — making it China’s largest trading partner bloc. As that trade deepens, CIPS infrastructure makes CNY settlement mechanically easier for more counterparties.

Here is what the CIPS expansion story routinely overstates.

CNY invoicing remains stubbornly small. Despite years of internationalisation efforts, the yuan accounted for approximately 3–4% of global trade invoicing as of late 2024 (SWIFT RMB Tracker data). The US dollar still invoices 47% of global trade. The euro handles another 23%. CNY gains have come largely in bilateral trade with China — not in third-party trade between non-Chinese parties. A German company selling to a Brazilian company will still invoice in USD, not CNY, regardless of CIPS capacity.

Capital account convertibility is the structural ceiling. The yuan is not freely convertible. China’s capital controls mean that foreign entities holding yuan have limited ability to invest, repatriate, or hedge freely. CIPS can settle yuan efficiently, but the yuan itself remains a restricted currency. Until capital account liberalisation accelerates, CNY internationalisation has a hard ceiling.

CIPS is not a multi-currency system. It processes yuan and only yuan. SWIFT handles 40+ currencies. For a foreign bank to use CIPS, it needs a reason to settle in CNY — meaning it needs a counterparty who wants CNY. Most of the world still prefers dollars.

Three implications worth sitting with.

First, CNY as a bilateral hedge. If you operate in any corridor with significant China exposure — Indonesian commodities, Thai manufacturing, ASEAN logistics — CNY-denominated invoicing reduces your FX conversion costs versus constant USD conversion. CIPS is the infrastructure that makes this operational rather than theoretical.

Second, the 10-year thesis. CNY internationalisation has been called “imminent” for a decade and has repeatedly underperformed expectations. The honest framing: it’s a slow structural shift, not a sudden event. CIPS expansion is a leading indicator, not a conclusion. Watch CIPS quarterly participation data and the monthly PBOC CNY trade settlement percentages — those are the signals, not headlines about yuan replacing the dollar.

Third, geopolitical optionality. Nations that want the option to transact outside USD infrastructure — Russia, Iran, Venezuela, and to varying degrees Brazil, India, and Saudi Arabia in specific contexts — are actively building that option. CIPS is one layer of it. Whether or not they exercise that option regularly, its existence changes the negotiating calculus in financial diplomacy.

The PBOC’s 14th Five-Year Plan included explicit targets for CIPS expansion. The 2025 Outline of the National Payment System Development Plan called for extending CIPS operating hours, improving yuan clearing in Africa and Latin America, and increasing direct participant count to 200+ by 2027.

Progress is tracking roughly on plan. Africa is the next frontier: South African banks, Nigerian correspondent institutions, and East African development finance entities are all in discussions for CIPS indirect access, linked to Chinese Belt and Road lending settlements and commodity trade flows.

The more sophisticated play for EM investors isn’t trading CNY directly. It’s understanding which companies in your portfolio have China-facing revenue and how their settlement cost structures will shift as CNY becomes progressively easier to use in more corridors. An Indonesian palm oil exporter with 40% of sales to China has a different CNY exposure profile in 2027 than they did in 2020.

CIPS is infrastructure. Infrastructure is boring until it isn’t. And when the payment rails change, the money flows change with them.