In January 2021, the Belgium-based financial messaging service Society for Worldwide Interbank Financial Telecommunication (SWIFT) established a joint venture with several subsidiaries of China’s central bank, the People’s Bank of China (PBOC). The joint venture, Financial Gateway Information Services Co., Ltd. (金融网关信息服务有限公司), prompted speculation in international media about whether it signaled “that China is exploring global use of its planned digital yuan.”

This speculation appeared to be informed in part by the fact that Mu Changchun, Director of the PBOC's Digital Currency Research Institute, had a seat on the joint venture’s board. In 2019, Mu, in his then role as the deputy director of the PBOC’s Payment and Settlement Department, had also championed SWIFT’s establishment of a wholly foreign owned entity in Beijing. This China-based SWIFT subsidiary, according to sources cited in reporting by the state-owned China Daily, could allow SWIFT "to play a larger and more active role in supporting the internationalization of the Chinese yuan."

The PBOC has made no public comment tying the joint venture to plans for the digital yuan, and public records on the joint venture’s business scope make no mention of it either. However, Wang Yongli, a former SWIFT board member and former vice president at the Bank of China (not to be confused with the PBOC) reportedly backed up the purported association, claiming that the joint venture aimed to “strengthen cooperation with SWIFT and jointly promote the internationalization of the [yuan] and the development of the digital currency.”

For its part, the PBOC, in a statement released last spring, explained that the joint venture’s mission is to ensure stable access to SWIFT for China-based users, following purported incidents of unreliable access for Chinese banks. The statement also mentioned that the venture would establish local “data warehouses” to analyze financial data and ensure compliance with domestic regulations. 

A full translation of the PBOC’s statement on the joint venture is included below: 

Source: http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4212383/index.html

Translation

Promoting the construction of financial gateways and improving cross-border financial network and information services

As the opening-up of China’s finance industry to the outside world continuously deepens, domestic financial institutions are increasingly making use of the financial networking and messaging services provided by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). The number of institutions making use of SWIFT and the scope of relevant business are expanding daily, and this places greater demands on the continuity and stability of these services, as well as the compliance and security of the data involved. Previously, a group of small and medium-sized domestic banks experienced unstable connections to SWIFT, which impacted their cross-border business operations. In May 2018, the Bank of International Settlements’ Committee on Payments and Market Infrastructures issued a report, “Reducing the risk of wholesale payments fraud related to endpoint security,” which made clear that stakeholders in financial messaging networks must take measures to jointly maintain financial stability, and required that member central banks push forward implementation of these measures. Currently, many central banks around the world have already issued plans for storing cross-border financial messaging data locally and—through the establishment of local data warehouses—carrying out compliance and prudence analysis. 

The People’s Bank of China attaches great importance to these requirements, and in 2018 published the “Notice on Strengthening the Management of Cross-Border Financial Network and Information Services.” In order to further improve the level of cross-border financial network and information services, and protect the legal rights and business continuity of domestic users of SWIFT (hereafter referred to as “users”), SWIFT and four Chinese-funded institutions jointly established Financial Gateway Information Services Co., Ltd. (金融网关信息服务有限公司) to provide users with financial gateway services. These services include the establishment and operation of local network concentration points for financial messaging services, the establishment and operation of local data warehouses, and other related services. SWIFT’s joint development of financial gateway services with these four Chinese-funded institutions is conducive to achieving mutual benefits and win-win dynamics, and provides users with more stable, more resilient, safer, and more compliant services. 

As a next step, the People’s Bank of China will strengthen supervision and guidance, and promote the standardized development of financial gateway services by all parties.

Chinese-language original: 

推动金融网关建设 提升跨境金融网络与信息服务水平

随着我国金融业对外开放不断深化，我国境内金融机构越来越多使用环球银行金融电信协会（SWIFT）提供的跨境金融网络与信息服务，参与机构、业务规模日益增长，对业务连续性、稳定性和数据的合规性、安全性均提出了更高要求。前期，我国部分中小银行曾出现与SWIFT网络连接不稳定情况，影响跨境业务办理。2018年5月，国际清算银行“支付与市场基础设施委员会（CPMI）”发布《与终端安全相关的批发支付欺诈风险管理策略》，明确报文传输网络利益相关方要采取措施，共同维护金融稳定，并要求各成员央行推动实施。目前，全球已有多家央行作出跨境金融报文本地存储安排，通过建立数据仓库进行合规审慎分析。

人民银行高度重视相关要求，于2018年发布了《关于加强跨境金融网络与信息服务管理的通知》。为进一步提升跨境金融网络与信息服务水平，保障SWIFT境内用户（以下简称用户）合法权益和业务连续性，SWIFT与4家中资机构合资成立金融网关信息服务有限公司，向用户提供金融网关服务，包括建立并运营金融报文服务的本地网络集中点、建立并运营本地数据仓库等服务。SWIFT与中资机构合作开展金融网关服务有利于实现互利共赢，为用户提供更为稳定、韧性强、安全且合规的服务。

下一步，人民银行将加强督促指导，推动各方规范开展金融网关业务。