Japan to bypass US dollar and SWIFT through direct bi-lateral currency settlement with China

When the Daily Economist ran their articleLong time U.S. vassal state Japan to bypass dollar and SWIFT to transact using China’s CIPS system in inter-bank settlement” posted below, it was a huge story that few people picked up on. This is a huge story. Japan is slowly and deliberately taking steps away from American dominance and it is becoming more apparent by the day. The idea that Japan has agreed on a $150 billion technology infrastructure package for the US under President Trump, might have been a “gift” to the US from Japan to speed up Japan’s breaking with America. Japan is a creditor nation which enables them to come up with such large amounts of credit. SWIFT (Society for Worldwide Interbank Financial Telecommunication) is located in Brussels, Belgium and is the principal international financial clearing house for the world particularly for western banks to clear dollar transactions.

China has developed the equivalent of SWIFT, their CIPS system to perform the same functions as SWIFT for the Chinese RMB. China’s CIPS (Cross-Border Inter-Bank Payments System) allows far cheaper transaction fees and allows for direct bi-lateral settlement bypassing the US dollar. Countries no longer need to go through the US dollar to transact. To make this CIPS system work, recall last year when China launched a Quantum-Communications satellite to put in place a hack-proof communications satellite that is more secure than the satellites the SWIFT system is run through. Japan is looking carefully at that fact through its corporate spying no doubt. I disagree with the idea Japan is a “vassal state of the US” considering all the diplomacy Japan has been participating in recently with Russia.  Japan is going to be investing heavily into Russia’s far east using the Kuril Islands as a stepping stone into Russia. Japan will continue building its military as it relies less on the US for its defense, so it is likely Japan will continue drawing closer to Russia.

Source: The Daily Economist

Long time U.S. vassal state Japan to bypass dollar and SWIFT to transact using China’s CIPS system in inter-bank settlement

February 9, 2017

Ever since China began to duplicate Western financial institutions starting in 2013, more and more nations have begun matriculating towards the East, and away from dollar hegemony. And one of the most important of these new infrastructures is the Chinese CIPS platforms which functions for the RMB the same way SWIFT does for the dollar.

Yet unlike the way SWIFT charges for swaps when nations have to use the dollar as a middleman since it still reigns as the world’s singular reserve currency, CIPS allows for much lower transaction fees and the convenience of bypassing the U.S. currency through direct bi-lateral currency settlement.

Hiroshima Bank and 13 other Japanese regional banks will connect to an interbank payment network that enables direct yuan wiring to mainland China — a move that will lower transaction fees and boost convenience for customers.

Joining the China International Payments System will reduce fees and processing days. Juroku Bank and Joyo Bank are also among the Japanese banks taking advantage of the system introduced by the People’s Bank of China. They will be connected one by one after the end of the Chinese New Year holidays via the Bank of Tokyo Mitsubishi UFJ, which connected to the system last year.

Previously, payments to mainland China had to be processed by clearing banks such as those in Hong Kong. CIPS can cut costs by several dollars (10 yuan equals $1.45) per transaction. Payments can be completed on the same day if certain conditions are met. – Asia.Nikkei

Please go to the The Daily Economist to read the entire article.