By setting up a system promoting wider use of the Yuan globally, the currency's being extended beyond Chinese borders. Much like the US Dollar.
But what exactly are the long term implications of such a move?
Xiang Songzuo is the vice president of the International Monetary Institute at the Renmin University of China.
"The establishment of CIPS, it will facilitate the transaction and investments by foreigners in Chinese financial markets, China inter bank bond market, and other bond markets, and in the future in Chinese equity markets it will be much easier for foreigners as well as for domestic investors to transfer money and to do transactions."
So with the expected increase in foreign investment flowing in to China, the presumption would be that the CIPS will help expand the economy.
However as Standard Chartered's regional head of greater china research, Stephen Green explains, the move, despite not creating more cash for the economy, will contribute towards extending the Yuan use and making the Reminbi cash flow procedures a lot simpler.
"I think clearly Beijing wants to push the reminbi out in to the world, and at the moment most of the reminbi is being – a pool of reminbi in Hong Kong and there's a clearing bank system, which allows the reminbi to travel from hong Kong back in to china. But that infrastructure's just not big enough and good enough to allow the Reminbi to go everywhere. So this system seems to be part of the push to allow the reminbi to go in to the United States and to Africa and everywhere else and to make sure there's a stable and a safe way of making those payments."
It's also believed the system will allow for more cash liquidity available in Reminbi instead of the US Dollar. With the recent fears of the Dollar further declining in value, it's said to be of great necessity, to make it easier for financial institutions to move the RMB across different channels.
Mike Bastin from Nottingham University's school of Contemporary Chinese Studies, feels it doesn't just ease the process for companies but general citizens with Reminbi assets as well.
"There are more and more Chinese tourists, international tourists and it's far convenient for them as they can do now, for example to go in to London and pay in RMB. They don't have to have US Dollars or Pounds in cash. They don't have to have credit cards so it's a very very welcome step for them. Ultimately, and I think this'll happen quite soon – settlement in RMB will be a huge advantage, not just for Chinese businesses but obviously the businesses they do within the UK."
He says even small businesses will benefit from the system due to being able to use RMB directy in financial transactions, especially since the Dollar is becoming less important and more volatile.
If it functions as expected, it can certainly open up the way for the Reminbi to gain even more importance in the global economy.
For CRI, I'm Abhijan Barua.
