While the world debates geopolitics, sanctions, and tariff wars, a quieter shift is unfolding beneath the surface. The technology infrastructure that moves money across borders is evolving, and China is silently leading that transformation.
Over the past few months, Beijing has accelerated the rollout of a new financial protocol: CIPS 2.0, the upgraded version of its Cross-Border Interbank Payment System, which was officially released in 2015.
Based on my assessment and conversations with banking and financial experts, this Chinese innovation isn’t just about creating an alternative to the Western financial rail. It’s about laying the groundwork for a parallel global payment architecture and redefining the future of transactions through speed, sovereignty, and innovative technology. It also invites emerging economies to reduce systemic risk and build resilience in the face of potential Western-led financial sanctions.
In April 2025, I posted a thread on X that covered how China’s decision to launch CIPS 2.0 across 16 ASEAN nations marked the beginning of a very intentional realignment in financial infrastructure. The simultaneous rollout reflected a strategic move to realign how money moves globally, and its implications go far beyond diplomacy.
China🇨🇳 has launched its Cross-Border Interbank Payment System (CIPS 2.0) simultaneously across 16 ASEAN and Middle Eastern countries.
This is going to be the start of a bloodless currency war, and #China is already winning it by facilitating businesses globally.
Read More👇 pic.twitter.com/moHdqAHfh3
— Shaiq Uddin (@shaiquddin) April 23, 2025
The Problem with SWIFT
The current global payments system, built around SWIFT (Society for Worldwide Interbank Financial Telecommunication), has existed for over 50 years. It’s technically a messaging system, not a settlement platform.
Every SWIFT-based transaction passes through correspondent banks, layered compliance checks, and multiple currency conversions. From both technical and strategic perspectives, this payment system is slow, expensive, and increasingly vulnerable to political pressure.
This has become even more obvious in recent years. For instance, removing Russian and Belarusian banks from SWIFT showed how financial infrastructure can be weaponized for political reasons.
More importantly, SWIFT was built for a world where most global trade was settled through the dollar and Western control over financial networks was taken for granted. In today’s world, those assumptions are eroding.
Three fundamental problems now define SWIFT’s limitations:
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Latency and cost: Settlement delays are common, and fees are stacked through intermediaries.
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USD dependency: Even regional trades often get routed through dollar conversions.
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Geopolitical exposure: SWIFT can be (and has been) weaponized through disconnections.
These issues don’t just affect sanctioned countries. They slow down legitimate trade and create friction for anyone trying to build scalable, resilient financial infrastructure in a multipolar world.
What Makes CIPS 2.0 Different
What makes CIPS 2.0 different isn’t just that it’s Chinese. It’s built exactly to meet the needs of today’s global financial flows.
While CIPS still relies on SWIFT’s messaging network for most transactions carried out by indirect participants, the two systems reflect fundamentally different philosophies. SWIFT is purely a messaging layer and is strictly under Western control. CIPS combines messaging (for some participants) with real-time settlement and clearing, especially for yuan-based trades, and takes a flexible approach.
Unlike the earlier version of CIPS, which mainly supported yuan-based trade, CIPS 2.0 is designed to handle real-time settlements, multicurrency clearing, and programmable finance. It offers API-level integration for banks, fintech, and even central banks, and makes transactions faster and cost-effective by cutting out intermediaries without compromising compliance. Perhaps most critically, it reduces reliance on legacy Western financial chokepoints.
To make it easy to understand, CIPS 2.0 is the infrastructure equivalent of upgrading from copper wiring to fiber optics. I mentioned two examples in my original X thread to explain how:
- Speed: The first transaction with CIPS 2.0 was a 12 million yuan (USD 16.5 million) payment for auto parts, cleared from Shenzhen to Kuala Lumpur in just 7.2 seconds, compared to SWIFT’s 3-day cycle.
- Cost: According to estimates, a USD 100,000 cross-border payment between two countries using SWIFT costs USD 4,950 (4.95%) and takes 3 days to process. The same payment using CIPS 2.0 would cost USD 0.12 and be processed within seconds, a +95% cost reduction.
Technically, it’s faster, cheaper, and more modular and programmable than a system like SWIFT. And it’s also designed to integrate with the next wave of financial innovation, including digital currencies, bilateral clearing agreements, and automated regulatory oversight.
Why ASEAN Was First and What It Signals
In my opinion, the initial launch of CIPS 2.0 across 16 ASEAN nations was not a test but a tactical move. These countries already have strong trade ties with China, high volume corridors, and interest in local currency settlements. Many are already integrated with China’s digital finance stack, whether through Alipay partnerships, Belt and Road projects, or e-commerce flows. Rolling out in ASEAN gave China a controlled environment to scale CIPS 2.0 adoption without provoking premature backlash from Western financial institutions.
This also sent a message to the Global South that financial innovation doesn’t have to come from the IMF or Wall Street. It can come from a parallel network that speaks the language of trade, not ideology. By choosing ASEAN as the pilot zone, China ensured a high-volume, low-friction environment to stress-test the system, with already functionally aligned partners.
Strategic Advantages for Emerging Markets
The implications go far beyond ASEAN. Any country with material trade exposure to China or ambitions to diversify its financial dependencies now has a working alternative. And it’s not just about alignment with Beijing. It’s about access to a more efficient financial backbone without ditching SWIFT.
I posted a follow-up opinion looking at how this could work for countries like Pakistan. However, the logic also applies broadly to the Middle East, Africa, Central Asia, and parts of Latin America.
Over the past three decades, Pakistan’s strategic partnership with China has deepened significantly. Yet, our financial infrastructure remains linked to a Western-led system, while global trade dynamics, currency flows, and geopolitical alliances have started shifting in new… https://t.co/LoTCbUQnP4
— Shaiq Uddin (@shaiquddin) May 28, 2025
The problem isn’t just that countries like Pakistan are overexposed to the dollar. Their entire financial infrastructure still runs on rails built to serve the interests of Western powers, even when their priorities are shifting to China. SWIFT remains the only pathway that creates vulnerability to sanctions, delays, and costs.
CIPS offers a second rail and allows for settlement in RMB, local currency, or through custom bilateral agreements. It simplifies trade with China and with countries already connected to CIPS. This is especially useful for BRI-linked trade, energy imports, regional manufacturing deals, and cross-border e-commerce. Most importantly, it doesn’t require ideological alignment with Beijing, something many Western-led systems implicitly expect.
In short, countries that rely on BRI-funded projects, Chinese investment, or East Asian trade can improve operational efficiency, reduce volatility, and retain more transactional control if they integrate with CIPS 2.0 alongside their existing systems.
Why This Isn’t Just a China Play
It’s tempting to frame CIPS 2.0 as a geopolitical tool to challenge the dollar, but that oversimplifies what’s really happening.
SWIFT’s shortcomings are structural, while CIPS 2.0 addresses all those issues with both technological clarity and strategic intent without trying to replace SWIFT entirely. China has developed this payment system considering what’s already happening in the physical world, such as how quickly infrastructure is moving east, how supply chains are diversifying, and how new alliances are forming along functional lines, not just ideological ones.
This is why many of the world’s top banks are quickly leaning towards integrating with CIPS 2.0, as it gives them interoperability without picking sides. Think of it like a dual-rail infrastructure. Using both systems will help navigate turbulence rather than betting everything on a single system. They don’t have to replace the dollar or abandon SWIFT, but they can reduce the cost of dependency.
But leveraging optionality as power and building dual-rail capability gives them more control over how they engage with both the Western and Eastern markets. This is no longer optional for countries serious about resilience, especially when they need more room to maneuver in different geopolitical situations and under Western-led sanctions.
Final Thoughts: Protocols Decide the Future
In today’s multipolar environment, financial sovereignty will increasingly come from decentralization, network optionality, and owning the infrastructure. Holding a reserve currency is just an outdated concept.
Business operators, technology builders, and policymakers should take the CIPS 2.0 rollout as a case study and understand that this isn’t about routing or settling payments only. It’s about power, control, and future-proofing financial systems. Countries and institutions shouldn’t wait for a global financial consensus. They should start making small infrastructure decisions at the core and build optionality into their systems now. And when the next disruption hits, they’ll already be moving.
China understands this, and it’s building accordingly.
