China puts yuan within easier reach of Africa, but adoption faces major hurdles: report
Quick Look
China is making it easier for African countries to pay for Chinese-led infrastructure projects in yuan, but weak banking rules, high debt levels, and dependence on the US dollar and euro continue to limit broader adoption, according to an analysis by Egypt-based political scientist Nadia Helmy published on Modern Diplomacy.
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Why It Matters
China is promoting CIPS as an alternative to Swift as part of its broader effort to internationalize the yuan. Standard Bank, Africa's largest lender by assets, has been integrated into CIPS.
China is making it easier for African countries to pay for Chinese-led infrastructure projects in yuan, but weak banking rules, high debt levels and historical dependence on the US dollar and euro continue to limit broader adoption of the currency, an Egypt-based political scientist said in an analysis released on Monday.
Beijing had been expanding its financial influence across Africa by integrating Standard Bank, the continent's largest lender by assets, into China's Cross-Border Interbank Payment System (CIPS), wrote Nadia Helmy, an associate political science professor at Beni Suef University in Egypt, on the digital media platform Modern Diplomacy.
CIPS, which Beijing promotes as an alternative to the Society for Worldwide Interbank Financial Telecommunication, commonly referred to as Swift, forms part of China's broader effort to internationalise the yuan.
Open Questions
- What specific regulatory changes has Beijing implemented to ease yuan payments?
- Which African countries are participating in CIPS-based yuan payments?
- What is the current volume of yuan-denominated infrastructure payments in Africa?
