In another sign of the intent to develop Shanghai as an international financial centre, the People’s Bank of China says it has set up an interbank clearing house in the city. These handle wholesale payments for financial institutions. London, New York and Hong Kong all have them, both government- and privately run. They are pretty much basic plumbing for any financial centre with global ambitions.
Up till now, the central bank has run China’s payment systems centrally from Beijing with local clearing houses in provincial cities connected through the Electronic Interbank System. (The big four state-owned banks operate and use their own Electronic Funds Transfer System). The central bank has effectively upgraded the local Shanghai clearing house to equivalent status to Beijing.
This Bystander’s understanding is that Shanghai will eventually assume the role of the principle national payments and settlement system from Beijing, and perhaps follow the Hong Kong ownership model, which is a joint venture between the Hong Kong Monetary Authority and the Hong Kong Association of Banks. It is also likely that other clearing houses will meanwhile be allowed to be set up in Shanghai by banks and other financial institutions, with foreign-currency clearing high on the priority list.