Bank of China advises banks to move away from SWIFT payment network

A report from the investment banking unit of Bank of China urged Chinese institutions to increase the use of a Chinese financial messaging network in lieu of SWIFT, for cross-border transactions in the mainland, Hong Kong, and Macau.

Why should we care?
Chinese institutions are preparing for possible U.S. sanctions on China over a Hong Kong security law, including impacts on its participation in international payment networks. Belgium-based global payment network SWIFT (Society for Worldwide Interbank Financial Telecommunication), enables cross-border transactions, allowing participating institutions to send and receive information. Bank of China advised institutions to prepare for the possibility that China may not be able to use the SWIFT network as a result of sanctions. SWIFT has cut off network partners before, blocking some North Korean institutions in 2017. To counter reliance on SWIFT, the Bank of China is recommending increased use of its own Cross-Border Interbank Payment System, which was created in 2015 to facilitate global use of the yuan.