On the afternoon of April 9, the 23rd Tao Xiang International Finance Lectures was successfully held at Renmin University China (RUC). Mu Changchun, head of the PBOC Digital Currency Research Institute, delivered a lecture on “The Terminal Security of Wholesale Payment Systems and SWIFT”. The lecture was chaired by Song Ke, deputy director of IMI and Deputy Secretary of CPC of the School of Finance, RUC, followed by comments from Tu Yonghong, deputy director of IMI and Professor at theSchool of Finance, RUC, and Tao Mei, Strategic Planning Advisor of ICBC. The lecture concluded with remarks from Zhuang Yumin, dean of the School of Finance, RUC.

Mr. Mu first identified three key concepts in the title. “Wholesale Payment Systems” refers to the payment system corresponding to the retail payment system for large value transactions between financial institutions. “Terminal Security” refers to the security of media at the interface of all systems. “SWIFT” stands for Society for Worldwide Interbank Financial Telecommunications, and is a messaging system. It is the global provider of financial messaging service with the right to formulate financial messaging standards.

Mr. Mu then introduced the operating mechanism and history of SWIFT. He stated the status of SWIFT and its impact on international politics and finance. He suggested that the distributed architecture of SWIFT should be used for reference in order to ensure system security. Mr. Mu used three examples to fully illustrate the importance of SWIFT as an information transmission channel. The stickiness of SWIFT’s operation affects the economic and financial stability of a country and even the world. SWIFT also exerts influence on financial security when it comes to the implementation of financial sanctions.

Mr. Mu pointed out that SWIFT will be under supervisionin China, including that all messages entering and leaving China need to pass through China’s financial gateway, a joint venture set up by Clearing Center of China, Payment & Clearing Association of China, CIPS, and Digital Currency Research Institute. In this way, VPN access will be replacedand the possibility of disconnection from the network will be ruled out, so as to solve the terminal security problem and to reduce cost. From the perspective of sanction measure, since China accounts for 45% of the joint venture’ shares, which is more than one-third of the total, the possibility of SWIFT’s interrupting, suspending, and changing services to China can therefore be eliminated.

Finally, Mr. Mu put forward his outlook for the future. First of all, he pointed out that we should ensure the market orientation of network management companies to fully respect SWIFT in their operation, so as to improve RMB internationalization and the international availability and use of RMB. Secondly, we should avoid the possibility of being sanctioned by binding interests. Therefore, in the process of opening up to the outside world, we should make sure that all stakeholders are closely connected and inseparable. He expressedhis views on the prospect of cooperation with SWIFT. Although there is no cooperation at present, future cooperation with SWIFT is not unlikely.

During the Q&A session, Mr. Mu discussed several issues: 1. The security of China’s future financial system from the perspective of the deterioration of international relations; 2. Under the backdrop of digital currency with the transformation of payment and clearing system, the relationship between retail and wholesale payment systems and the macro development of China’s payment and clearing system in the future.