China is prepared to launch the China International Payment System, or CIPS, which is meant to facilitate the global and international use of the Chinese currency, Yuan, as soon as September or October this year, three sources revealed.

CIPS would take the place of a group of networks, consolidating into one major system to make easier transactions that involve the Yuan, otherwise known as the renminbi. This would speed up the internationalization of the currency of the largest economy in Asia.

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"The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks," a senior banking source said.

"The official launch will be in September or October, depending on the results of the testings and preparation," the source added.

Authorities are reportedly working towards completing the deployment of the first phase of CIPS before the year ends in December.

"It's not a plan but we are trying our best to have the first phase (of CIPS) online before the end of this year," said another source, who declined to be named because he lacked of authority to interact and speak with media.

"If it's all smooth, (the launch) will be in September or October. If there is a need for a bit more time, we are still confident about (rolling it out) before the year-end," he added.

CIPS is seen to completely alter and enhance China's international transactions.

The world first heard about the system from the People's Bank of China back in the early second quarter of 2012. Launch was pegged for last year but technical problems pushed back the start date.

"Though the international renminbi clearing platform will take several years to develop, the basic functionality is expected to markedly improve access for foreign corporates as well as help accelerate the process of internationalising the renminbi," Standard Chartered noted.

At present, cross-border yuan clearing is made through either offshore yuan clearing banks or with a counterpart bank in the mainland, China.

The launch of CIPS will enable companies outside China to directly clear yuan transactions with their Chinese counterparts, considerably shortening the payment cycle.

"CIPS for the first time will put the renminbi on an even footing with other global currencies in areas such as operating hours, risk reduction and liquidity optimisation."

The People's Bank of China was not immediately available for comment when contacted.

TagsChina International Payment System, CIPS