The Industrial and Commercial Bank of China (ICBC) Yangon Branch joined China’s Cross-Border Interbank Payment System (CIPS) on Wednesday. Junta-appointed Central Bank of Myanmar (CBM) Governor Than Than Swe, who attended the ceremony, said the ICBC’s membership will enable Myanmar to greatly reduce its dependence on US dollars for international transactions.
Since last year, junta boss Min Aung Hlaing has often complained that some countries are using US dollars “to bully smaller nations.” He has since been seeking ways to replace the use of the greenback with other currencies, including promoting the use of the Chinese yuan (RMB) and Russian ruble.
Previously Myanmar traders were allowed to use either yuan or dollars in cross-border transactions with China. But in June, the junta’s Foreign Currency Supervisory Committee made it mandatory to use yuan.
Than Than Swe and Chinese Ambassador to Myanmar Chen Hai, who attended a ceremony marking the bank’s CIPS membership on Wednesday, also called for broader use of the Chinese and Myanmar currencies, not only in border trade, but also in maritime trade and investments.
Chen said he appreciated the use of the yuan in the process of clearing—the procedure by which financial trades are settled—in China-Myanmar trade and the implementation of Belt and Road Initiative projects in Myanmar.
ICBC Yangon Branch is among the first commercial banks that have been authorized to provide comprehensive RMB financial services for border trade between China and Myanmar. These services include RMB account opening, deposits, settlements, financing and foreign exchange for both Chinese and Myanmar clients.
By linking the CBM Net System with the CIPS System, said Than Than Swe, local banks can become indirect participants in cross-border transactions using Chinese currency.
Than Than Swe said the CIPS system offered an alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT). The ICBC Yangon Branch’s inclusion in CIPS will significantly improve cross-border payment efficiency between the two countries, she added.
The regime has been pushing exporters and importers to use yuan, baht and rupees in border trade with China, Thailand and India. It is also seeking direct payments in ruble and kyats with its major arms supplier Russia.
The ceremony on Wednesday took place as Myanmar’s border trade with China has halted due to fighting in northern Shan State. The ceremony was attended by the chairman of the Myanmar Banks Association, KBZ Bank chairman and arch-crony Aung Ko Win, and representatives from local and foreign bank branches.
