Libya Joins China's Payment System to Reduce US Dollar Dependence

The Governor of the Central Bank of Libya, Naji Mohammed Issa, and the Governor of the People’s Bank of China, Pan Gongsheng, agreed on Saturday to connect Libyan commercial banks to China’s payment and settlement system. In a statement on its website, the Central Bank of Libya said Issa, who is visiting Beijing, met with the Governor of the People’s Bank of China on Friday. They reviewed the volume of trade between the two countries and discussed ways to strengthen and increase its growth rate. “The importance of launching a new phase of a genuine strategic partnership between the two central banks was discussed. It was agreed to connect Libyan commercial banks to the China Cross-Border Interbank Payment System, CIPS, which will simplify financial transfers and make them easier to execute,” the statement said. CIPS was launched by the People’s Bank of China in 2015 to facilitate international transfers using the Chinese yuan. The system serves as infrastructure enabling banks to send and receive payments in yuan directly, reducing dependence on the US dollar by eliminating the need to process transactions through intermediary banks. The statement added that both parties also agreed to address existing obstacles and facilitate trade procedures in a way that will increase trade volume between the two countries. The activities will commence with the implementation of direct money transfers to China, thereby easing transactions for small-scale merchants. Both parties also agreed to allow the opening of letters of credit directly through Chinese banks, according to the statement. They also agreed to arrange a visit by an official Libyan banking delegation to Beijing, led by the Central Bank Governor and accompanied by directors of Libyan commercial banks, to meet their Chinese counterparts as soon as possible. The statement noted that the planned visit aims to build cooperation between commercial banks in both countries and to leverage China’s experience in electronic payments and direct financial transfers. It was further added that these measures will help reduce dependence on the informal market, ensure compliance with anti-money laundering and counter-terrorism financing standards, and enhance the reputation of Libya’s banking sector.