- The Decline of the Swift Network
- The Chinese Equivalent of the Swift Network
- Bitcoin in Asian Prospects
The internationalization of the yuan is progressing much faster than what the Swift data suggests. Meanwhile, Bitcoin remains neutral.
The Decline of the Swift Network
The company Swift dominates most international banking transactions. More than 11,000 financial institutions in over 200 countries and territories use its services. Swift is responsible for the standardization that underpins international financial messaging, used by private banks, central banks, and financial markets.
The yuan is currently the fourth most used currency through the Swift network, maintaining a share above 4% for the ninth consecutive month. For comparison: the British pound - 7%, the euro - 22.50%, and the US dollar - 47.80%.
Although these figures are hardly impressive, the Swift network is no longer a monopoly. The militarization of the Swift network, the euro, and the dollar against Russia caused a cold reaction from the BRICS countries, prompting them to revert to their own currencies and new international payment systems. The use of the yuan increased after Russia was disconnected from the Swift network. Sino-Russian trade (~$240 billion per year) is now almost exclusively in yuan or rubles.
The internationalization of the yuan has become a reality, with Xi Jinping openly inviting Gulf countries to sell their oil in yuan through the Shanghai market.
The Chinese Equivalent of the Swift Network
The transaction volume of the Chinese cross-border payment system CIPS in 2023 was 123 trillion yuan ($17 trillion), representing a year-on-year increase of 27%. This figure is expected to double this year, reaching $34 trillion. By comparison, $150 trillion is traded through the Swift network.
The CIPS system currently has 150 direct participants and 1,401 indirect participants spread across 117 countries and regions. The system can cover up to 184 countries and regions through more than 4,700 banks.
The yuan’s share in global exchanges is significantly higher than 4.75%, approaching 20%. Over 53% of China's trade is now conducted in yuan, largely thanks to bilateral currency swaps that have benefited 44 countries to the tune of over $500 billion.
Bitcoin in Asian Prospects
The Chinese government has not changed its stance on Bitcoin, despite the emergence of Bitcoin ETFs in Hong Kong. Meanwhile, China's Russian ally is moving faster: the Duma and the Russian Central Bank have authorized two platforms to conduct cross-border transactions in Bitcoin.
This experimental service will initially be available only to large export-import companies. It’s important to note that some media outlets mistakenly reported about stablecoins backed by the ruble and yuan, which are not part of this experiment.
Even the United States is beginning to recognize that Bitcoin will sooner or later become the international reserve currency. Donald Trump has already announced the creation of a strategic Bitcoin reserve in case of re-election, potentially amounting to 1 million BTC.
The internationalization of the yuan continues to accelerate, having a significant impact on global trade. Meanwhile, Bitcoin remains a critical aspect of future financial transformations.
