China's central bank, the People's Bank of China, announced it will improve its monitoring on cross-border financial information and data transfer to prevent cross-border payment risks and enhance financial stability, according to a statement released on Tuesday.

The PBOC disclosed the Society for Worldwide Interbank Financial Telecommunication, a global provider of financial messaging services, has established a joint venture limited company with four Chinese firms to provide information services, including establishing and operating a local centralized node of financial messaging networks and local data warehouses.

This company will provide unified services to SWIFT users based in China, acting as a gateway that connects internal and external financial information networks.

The main purpose of establishing a centralized node of the network domestically is to improve the stability, resilience and security of cross-border financial information services, and to prevent unexpected situations, such as a cut off of the network. Users can connect with the SWIFT messaging network by accessing the centralized node, the statement said.

To further improve transparency in cross-border financial network and information services, and better monitor cross-border offshore data, "it is necessary to store the cross-border messaging information inside China, which can be used when it is necessary for internal risk control and supervision," the PBOC statement said.

As China's financial industry continues to open up to the world, an increasing number of domestic financial institutions are beginning to use the cross-border financial network and information services provided by the SWIFT. It requires higher standards of continuity, stability and data compliance and security for the cross-border payment service, the central bank said.

Earlier, some small and medium banks in China had experienced an unstable connection with the SWIFT network, which affected their cross-border businesses, according to the central bank.

In May 2018, the Committee on Payments and Market Infrastructures of the Bank for International Settlements developed a strategy to encourage and help focus industry efforts to reduce the risk of wholesale payments fraud related to endpoint security.

It requires all relevant stakeholders, including operators of wholesale payment systems and messaging networks, to take a holistic and more coordinated approach to guarding against the potential loss of confidence in the integrity of the wholesale payment ecosystem as a whole.