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Pilot program to modernize payments
By Zheng Lifei (China Daily)
Updated: 2006-12-19 09:36
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Previously, cheques could only be cleared within the city in which they were issued, creating a serious obstacle in an increasingly inter-related national economy.
Under the pilot Cheque Image Exchange System, cheques are cleared electronically using digital image files.
Rather than having to present paper cheques, banks can exchange digital images of the documents, saving on costs and creating a more efficient system.
The programme is seen as a major part of the country's payment infrastructure reform.
In a bid to prevent risks in the pilot programme, the highest cheque to be cleared in a different city from which it was issued is capped at 500,000 yuan (US$63,900), the People's Bank of China, the central bank, said yesterday.
The central bank said it is scheduled to complete the establishment of a nationwide cheque image exchange system before the end of June next year.
By that time, cheques could be cleared nationally.
Cheques are one of the most-used non-cash payment tools in China, and play a dominant role in the country's payment system, the central bank said yesterday.
Last year, there were 1.8 billion cheque transactions totalling 350 trillion yuan (US$4,430 billion), according to central bank figures.
As technology advances, there is a global trend to make cheque payments electronic, rather than paper-based.
In the United States, there is a law called Check Clearing for the 21st Century Act (Check 21), which promotes a paperless system.
Check 21, which became effective on October 28, 2004, is designed to foster innovation in the payment system and to enhance efficiency by reducing some of the legal impediments to cashing cheques.
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