Media365
The Governor of the Central Bank of Libya, Naji Mohammed Issa and the Governor of the People’s Bank of China, Pan Gongsheng, on Saturday agreed to connect Libyan commercial banks to China’s payment and settlement system, in a bid to reduce reliance on the US dollar.
Issa confirmed the news in a statement published on the bank’s website. The meeting between the two sides took place during Issa’s visit to Beijing, where he met Gongsheng on Friday. The two sides reviewed the volume of trade between the two countries and discussed ways to strengthen it and increase its growth rate.
“The importance of launching a new phase of genuine strategic partnership between the two central banks was discussed. It was agreed to connect Libyan commercial banks to China’s Cross-Border Interbank Payment System, CIPS, which will simplify financial transfers and make them easier to conduct,” Issa said in the Saturday statement.
China expands its presence
It is pertinent to note that CIPS was launched by the People’s Bank of China back in 2015 to facilitate international transfers using Chinese Yuan. The body serves as an infrastructure that enables banks to send and receive yuan-denominated payments directly, reducing reliance on the US dollar by eliminating the need to process transactions through intermediary banks.
The latest statement from Issa added that the two sides agreed to address obstacles and facilitate trade procedures in a way that would further increase the volume of trade between the two countries. With this in mind, Libya would begin with the implementation of direct money transfers to China, making transactions easier for small-scale traders.
During the meeting, the two sides also agreed to allow letters of credit to be opened directly through Chinese banks. They also agreed to arrange a visit to Beijing by an official Libyan banking delegation, headed by the governor of the Central Bank and accompanied by the directors of Libyan commercial banks, to meet their Chinese counterparts at the earliest possible opportunity.
The statment maintained that the planned visit would aim to establish cooperation between commercial banks in the two countries and to benefit from China’s experience in electronic payments and direct financial transfers. It added that the measures would help reduce reliance on the informal market, ensure compliance with anti-money laundering and counter-terrorism financing standards, and improve the reputation of Libya’s banking sector.
With inputs from agencies.
