Libya, China agree to settle trade in yuan via CIPS
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The central banks of Libya and China have agreed to connect Libyan commercial banks to the Chinese cross-border payment system CIPS, enabling direct yuan settlements and reducing dependence on the US dollar. The deal was reached during a visit by Libyan Central Bank Governor Naji Muhammad Isa to Beijing, where he met with People's Bank of China Governor Pan Gongsheng.
The Agreement
Libya and China have agreed to connect Libyan commercial banks to the Chinese cross-border payment system CIPS, allowing direct yuan settlements. The deal was signed during Libyan Central Bank Governor Naji Muhammad Isa's visit to Beijing, where he met with People's Bank of China Governor Pan Gongsheng. The move aims to reduce Libya's reliance on the US dollar for international financial transactions.
CIPS System Benefits
CIPS, launched by the People's Bank of China in 2015, enables financial institutions to conduct cross-border payments in yuan without using traditional dollar channels. For Libyan banks, the system will allow direct sending and receiving of payments in Chinese currency, accelerating international transfers and reducing intermediaries. The system currently serves over 1,000 financial institutions worldwide.
Next Steps
The next phase includes launching direct money transfers to China and enabling letters of credit through Chinese banks. Both sides agreed to jointly remove trade barriers, improve financial procedures, and expand cooperation between their banking systems. The Libyan central bank estimates the move will facilitate operations for companies, importers, and small businesses.
What's Next
Libyan commercial banks are expected to begin connecting to CIPS in the coming months, with direct yuan transfers to China to follow. It remains unclear how quickly Libyan businesses will adopt the new system and whether it will significantly reduce dollar dependency in the near term.
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Libya, China agree to settle trade in yuan via CIPS
