Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition

72 Pages Posted: 13 Mar 2023 Last revised: 2 Apr 2024

See all articles by Felix Chang

Felix Chang

University of Cincinnati College of Law; Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: March 8, 2023

Abstract

China watchers have decried the emergence of the Cross-Border Interbank Payment System (“CIPS”) as a turning point in the move to dethrone the U.S. dollar. This Article situates CIPS, which clears and settles Chinese renminbi transactions, with other financial market infrastructures, drawing lessons from how those entities have thrived or failed.

In recent conversations, CIPS has been conflated with other infrastructures (e.g., the SWIFT payment messaging system) and currency trends (e.g., de-dollarization and sanctions evasion). However, a currency clearinghouse is very different than most financial institutions. For CIPS, the market-maker in the adjacent trading market is the Chinese government, a sovereign state that wields a monopoly over the renminbi. Although the global currency trading market exhibits competition, monetary sovereignty complicates the analysis of monopolization.

This Article’s primary contribution is to present a coherent theoretical framework for CIPS by synthesizing the treatment of currency clearinghouses across law, finance, and economics. The Article concludes that CIPS cannot, by itself, guarantee widespread acceptance of the renminbi.

Keywords: antitrust, competition, currencies, dollar, renminbi, sanctions

Suggested Citation

Chang, Felix, Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition (March 8, 2023). Ohio State Legal Studies Research Paper No. 835, Available at SSRN: https://ssrn.com/abstract=4382295 or http://dx.doi.org/10.2139/ssrn.4382295

Felix Chang (Contact Author)

University of Cincinnati College of Law ( email )

P.O. Box 210040
Cincinnati, OH 45221-0040
United States

HOME PAGE: http://www.law.uc.edu/faculty-staff/felix-b-chang

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

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