Absa is evaluating membership in a yuan-based payments platform to settle cross-border transactions directly in Chinese renminbi. The move could reshape how money flows between Africa and its largest trading partner.
Standard Bank recently became the first African bank to process transactions through China's Cross-Border Interbank Payment System (CIPS). CIPS is China's answer to SWIFT, designed to promote yuan usage in global commerce.
Direct yuan settlement eliminates the need for dollar intermediation, reducing costs, settlement times, and exposure to dollar volatility. Absa already has a Beijing subsidiary, making this a logical next step.
China has been pushing yuan internationalization through bilateral swaps, CIPS expansion, and encouraging trade partners to settle in renminbi. However, execution complexity remains due to China's capital controls and limited renminbi convertibility.