Key Points
- 1. Central bank governors of Libya and China met in Beijing on 18 July and decided to connect commercial banks to CIPS.
- 2. Thanks to the agreement, Libyan banks will be able to send and receive payments directly in Chinese yuan.
- 3. The CIPS system aims to reduce dependence on the US dollar by enabling transfers without the need for intermediary banks.
- 4. The two countries plan to remove trade barriers and initiate direct money transfers for small tradesmen.
By the Numbers
Governor of the Central Bank of Libya Naci Muhammed İsa and Governor of the People's Bank of China Pan Gongşeng agreed on 18 July to connect Libya's commercial banks to China's payment and clearing system. As a result of the talks held in Beijing, Libyan banks are planned to be integrated into China's Cross-Border Interbank Payment System (CIPS). This step aims to simplify and accelerate financial transfers between the two countries.
The system in question will allow Libyan banks to send and receive payments directly in Chinese yuan. This structure enables the use of yuan without requiring transactions to pass through intermediary banks. Thus, it is aimed to reduce the countries' dependence on the US dollar.
The two central banks also agreed on the removal of existing trade barriers and the facilitation of commercial processes. The initiation of direct money transfers, including small tradesmen, is considered an important step in increasing the trade volume between the two countries.
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Frequently Asked Questions
- What is CIPS and how does it work?
- CIPS is a cross-border payment system established by the People's Bank of China in 2015, which allows international banks to send and receive payments directly in yuan without intermediary institutions.
- What is the main purpose of Libya's participation in this system?
- This step was taken to facilitate financial transfers between Libya and China, accelerate commercial transactions, and reduce the countries' dependence on the dollar.
- How will the agreement affect trade or tradesmen in Libya?
- The system will enable direct money transfers to China, including small tradesmen, and will contribute to the increase in trade volume between the two countries.
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