BEIJING -- The SWIFT interbank messaging provider is expanding its footprint into the world's second-largest economy, with the Brussels-based society saying Wednesday that China has approved the founding of a subsidiary in Beijing.

Alain Raes, the Society for Worldwide Interbank Financial Telecommunication's chief executive for the Asia Pacific and Middle East region, told the Nikkei Asian Review it was setting up the wholly-owned unit in the Chinese capital to tap into growing demand for the yuan.

"If you want to be part of the club you need to join the rule of the club," Raes said in an interview in Beijing.

The cooperative serves over 11,000 financial institutions globally, providing secure communication services. One of its products, the SWIFT Global Payments Innovation, allows selected cross-border transactions to be approved in seconds.

SWIFT already has two offices in China, but the locally incorporated outfit -- the first of its kind -- will facilitate yuan and other foreign currency transactions. Raes said it will provide a "better customer experience" as invoices and transactions will use the Chinese language.

The yuan ranked fifth among global currencies, accounting for 1.88% of payments that went through SWIFT in April. The U.S. dollar was used for 40.76% of transactions, followed by the euro (33.16%), the U.K. pound (7.11%) and the Japanese yen (3.47%).

Given China's growing economic standing, Raes said there will be a "rebalancing over time" of this ratio. Chinese companies are increasing their presence, both domestically and abroad, through undertakings such as the Belt and Road Initiative that promote trade and investment.

"You need to have credibility, visibility, relevance, the right regulatory environment and thrust in China," Raes said.

As SWIFT's business model is based on economies of scale, Raes said the Beijing unit would contribute to the society's cost-efficiency.

Alain Raes (Photo by Yusho Cho)

Even so, it may not help to raise the profile of yuan, as the Chinese currency has "evolved naturally" with the growth of the economy, he said.

Beijing has also set up its own yuan-denominated settlement system, known as Cross-Border Interbank Payments System or CIPS, which offers clearing and settlement services for participants in cross-border yuan payments and trade.

Use of CIPS grew about 80% in value terms last year, a Nikkei survey found, underscoring the rising challenge to the hegemony of the U.S. dollar.

Since the People's Bank of China began operating CIPS in October 2015, hundreds of banks in 89 countries and regions have participated. The system processed 26 trillion yuan ($3.76 trillion) of payments last year.