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Felicia Tan
in
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July 31 09:09

Reuters: Chinese banks need to prepare for SWIFT disconnection

Chinese banks should prepare for possible U.S. sanctions and disconnection from SWIFT, Reuters writes with reference to the report of the investment unit of the Central Bank of China.
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Chinese banks should prepare for possible U.S. sanctions and disconnection from SWIFT. For this purpose, Chinese credit institutions are encouraged to increase the use of their own finance transfer system in cross-border transactions in mainland China, Hong Kong and Macau.
This month, Reuters has already written that Chinese state banks are developing an action plan in case the U.S. Congress imposes sanctions against them for working with China, which is associated with the development of a national security law in Hong Kong.
More active use of China's Cross-Border Interbank Payment System (CIPS) instead of the Belgian SWIFT will also limit U.S. authorities' access to data on China's international financial transactions, according to a report by China's Central Bank.
In its report, the regulator considers various options for sanctions that Washington may apply to Chinese banks, and as one of them indicates the disconnection from SWIFT. If Washington deprives Beijing of access to dollar transactions, China may in return refuse to use the dollar as the main instrument of its exchange control, the document says.