App

New steps to secure cross-border data flows
Updated: March 25, 2021 08:53 China Daily

Monetary authorities have recently come out with measures, including a joint venture, to secure cross-border financial information transfer and payments, to prevent unexpected interruptions, and improve data security, experts said.

The latest move by the People's Bank of China, the central bank, seeks to improve monitoring of cross-border financial information and data transfers by establishing a joint venture with the operator of a global financial messaging network, to prevent cross-border payment risks.

The PBOC said on March 23 that the Society for Worldwide Interbank Financial Telecommunication, a global provider of financial messaging services, has established a joint venture limited company with four Chinese partners to provide information services, including establishing and operating a local centralized node of financial messaging networks and local data warehouses.

The company, Cross-border Financial Information Services Co Ltd, will provide unified services to SWIFT users based in China and act as a gateway connecting internal and external financial information networks.

It indicated that China is strengthening financial security and expanding safe channels for cross-border payments and settlements, to prevent extreme case scenarios of some countries disrupting the financial messaging infrastructure and influencing Chinese entities' international businesses, experts said.

Companies that are using the SWIFT network for payments and settlements may face risks if the transaction was forced to terminate. Financial institutions, which provide international payment and settlement services to these companies, may also face the risk of disruptions, said Ju Jiandong, director of the Center for International Finance and Economic Research of Tsinghua University.

Since the current global cross-border payment and settlement systems are dominated by some developed countries, China has to speed up the construction and upgrade of its digital financial infrastructure, and promote the establishment of a new system of RMB cross-border payments and settlements, including such a system for digital yuan, said Ju.

The PBOC said the main purpose of establishing a centralized node of the network domestically is to improve the stability, resilience, and security of cross-border financial information services and prevent unexpected situations, such as a cutoff of the network. Users can connect with the SWIFT messaging network by accessing the centralized node.

In order to further improve the transparency in cross-border financial network and information services, and better monitor cross-border offshore data, "it is necessary to store the cross-border messaging information in China, which can be used when it is necessary for internal risk control and supervision," said a PBOC spokesperson.

A SWIFT statement on March 23 called the move "a compliance update in China" which allows SWIFT to continue and strengthen services to support its customers' business goals in the country.

The statement said the new joint venture with four market participants in the payment service and infrastructure sectors-the China National Clearing Centre, Cross-border Interbank Payment System Co Ltd, the Payments and Clearing Association of China, and the PBOC Digital Currency Institute — is majority-owned and controlled by SWIFT. It will be able to obtain necessary licenses for local network management activities.

As China's financial industry continues to open up to the rest of the world, an increasing number of domestic financial institutions have started to use the cross-border financial network and information services provided by SWIFT. It requires higher standards of continuity, stability, and data compliance and security for the cross-border payment service, the PBOC spokesperson said.

Copyright© www.gov.cn | About us | Contact us

Website Identification Code bm01000001 Registration Number: 05070218

All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to www.gov.cn.

Without written authorization from www.gov.cn, such content shall not be republished or used in any form.

Mobile

Desktop

Copyright© www.gov.cn | Contact us

Website Identification Code bm01000001

Registration Number: 05070218