Cambodia's journey towards becoming a member of the Chinese central bank’s Cross-Border Interbank Payment System (CIPS) will require more time due to the “stringent conditions” put forth by the central bank, according to National Bank of Cambodia (NBC) deputy governor Chea Serey.
Serey explained the scenario to reporters after signing a memorandum of understanding (MoU) with UnionPay International on cross-border QR code payments on July 10.
“Discussions with the deputy governor of the People’s Bank of China [PBC] and our working group revealed that the process is more time-consuming than we anticipated due to the stipulated conditions. Our aim is to satisfy these conditions and secure membership,” she said.
While they explores how Cambodia can achieve CIPS membership, the NBC plans to establish indirect connections with prominent Chinese banks.
“Compared to the Swiss central bank, with which we have worked and which deals in all currencies, our dealings with the [PBC] are more challenging as it only transacts in Chinese yuan,” she noted.
Citing the PBC’s cautious approach due to its new system as opposed to the Swiss bank’s extensive experience in transactions, Serey highlighted the hurdles the NBC faces.
“Accessing the CIPS would present significant advantages to Cambodia, offering more regional and international payment options, facilitating and promoting trade, investment and tourism, and particularly strengthening bilateral trade with China and countries using the yuan. It would also enable Cambodia’s international reserve capital investment in yuan,” she stated.
Ky Sereyvath, an economics researcher at the Royal Academy of Cambodia, agreed that Cambodia’s inclusion in various international payment systems would be advantageous.
“Joining the inter-bank payment system helps Cambodia avoid dollar flow disruptions, which we currently face when making payments in dollars through the Bank of America. We’ve seen how countries can plunge into crisis when the US blocks international cash flows, a situation referred to as US sanctions,” he explained.
Sereyvath also pointed out that joining the CIPS would ensure economic flow continuity during crises, especially as Cambodian-Chinese economic ties become more robust.
“The CIPS membership would further facilitate trade and enable international payments in yuan,” he added.
As of now, the CIPS, established by the PBC in 2015, includes 76 directive members and 1,265 other members spread across 106 countries.