Cenbank positive on China’s cross-border payment system proposal, Panda bond
Bangladesh Bank officials described it as an additional international payment channel alongside existing systems such as SWIFT, saying it could broaden options for trade and business payments.
Bangladesh is considering the possibility of joining alternative international payment systems beyond dollar-dominated networks as discussions take place on China's Cross-Border Interbank Payment System (CIPS) alongside potential Panda Bond financing.
A delegation from China's state-owned Export-Import Bank held discussions with Bangladesh Bank officials today (9 June) regarding CIPS integration and Panda Bond issuance. Central bank officials said there is no policy objection if any commercial bank shows interest in joining the CIPS platform independently.
The CIPS is a China-backed cross-border payment and settlement system launched in 2015 to facilitate renminbi (RMB) transactions and expand the global use of the Chinese currency.
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Bangladesh Bank officials described it as an additional international payment channel alongside existing systems such as SWIFT, saying it could broaden options for trade and business payments.
A senior Bangladesh Bank official said, "The more channels available for international payments, the more opportunities it creates for trade and business."
He added that banks interested in joining would need to express their intent and proceed independently, with no immediate regulatory barriers or separate approval requirements at this stage. "Once a bank begins the actual process, the necessary issues will become clearer. But for now, our stance is positive," he said.
Central bank officials said China had earlier proposed linking Bangladesh to its payment network, and the idea gained traction after Western sanctions on Russian banks highlighted the need for alternative global financial infrastructure.
In March 2024, China's Ambassador to Bangladesh, Yao Wen, met the then Bangladesh Bank governor to discuss CIPS, with officials suggesting it could serve as a parallel global payment channel alongside SWIFT.
However, officials stressed that the effectiveness of CIPS would depend heavily on the internationalisation of the renminbi. One official said, "If the use of RMB in international trade increases, the usage of this platform will also expand."
They added that Bangladesh's trade with China remains heavily import-oriented, limiting immediate benefits unless Chinese investment, loans, and project financing increase substantially to generate RMB-based financial flows.
Panda bond financing
Panda Bonds also featured in the discussions as a potential tool for diversifying financing sources. These are yuan-denominated debt instruments issued in China's domestic bond market by foreign governments, international financial institutions, or multinational corporations, allowing them to raise funds directly from Chinese investors in RMB.
While participation is primarily led by Chinese institutional investors, foreign investors may also take part in certain cases. Sovereign-level decisions on issuance would be led by the Ministry of Finance, according to the central bank officials.
Bida meeting with Chinese delegation tomorrow
A separate meeting between the Bangladesh Investment Development Authority (Bida) and a delegation from China Exim Bank is scheduled for tomorrow (10 June), where investment-related issues are expected to be discussed, according to officials.
Bida Executive Member and Head of Business Development Nahian Rahman Rochi said the meeting would focus on broader investment cooperation with the Chinese delegation.
Experts said CIPS could emerge as a long-term strategic option for Bangladesh but cautioned that its benefits would depend on deeper economic integration.
Chairman of Research and Policy Integration for Development (RAPID) Mohammad Abdur Razzaque said, "If Chinese investment, loans, and project financing increase, cross-border settlements will become easier using those financial flows. Otherwise, Bangladesh may again have to rely on the US dollar for transactions."
He added, "This could open up a window of opportunity. However, the extent of real benefits will depend on how deeply Bangladesh-China economic relations and transaction flows develop in the future."
