China's central bank on Thursday officially launched the first phase of the country's Cross-border Interbank Payment System (CIPS) designed to facilitate the greater use of the yuan in international trade, hailing it as a milestone in the yuan's internationalization.

The system, which mainly provides cross-border clearing and payment services for domestic as well as overseas financial institutions, will boost the global use of the yuan by cutting costs and processing time, according to Fan Yifei, deputy governor of the People's Bank of China (PBC).

Previously, cross-border yuan clearing had to be done through one of the offshore yuan-clearing banks in Hong Kong or London, or with the help of a corresponding bank on the Chinese mainland.

"CIPS is an important milestone in the internationalization of the yuan," said Fan  during its launch in Shanghai, according to the Xinhua News Agency.

CIPS will play a significant role in shoring up China's real economy and promote domestic enterprises "going abroad," said Fan.

Nineteen banks will be directly involved in the CIPS, including four major Chinese banks, HSBC (China), Citibank (China) and Standard Chartered (China), all of which are allowed to open accounts with CIPS and receive services directly.

In addition, 38 Chinese banks and 138 foreign financial institutions have been approved as indirect participants. They are entitled to CIPS services through the 19 banks directly involved.

Less than an hour after it was launched, more than 300 transactions worth 676 million yuan ($106 million) had been completed through the new payment system, according to the China Securities Journal on Thursday.

Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, told the Global Times on Thursday that the new CIPS makes cross-border clearing and payment transactions more efficient, thus widening the yuan's use.

The PBC also said the yuan's current cross-border clearing methods, like intermediate clearing banks, would "continue to exist based on market demands."

Xi Junyang, a professor with the department of finance at the Shanghai University of Finance and Economics, also told the Global Times on Thursday that since China's overseas economic activities have increased, and demand for yuan payments have strengthened, it's "inevitable" for the yuan to be used more globally.

In August, the yuan overtook the Japanese yen as the world's fourth-largest payment currency, global transaction service provider Swift reported on Tuesday.

Data from Swift also showed that the yuan recorded a record high of 2.79 percent of all global payments by August, up from 0.6 percent at the start of 2013. More than 1,700 financial institutions processed yuan payments in August, up 14 percent from the previous year.

Xu also said that expanding the yuan's usage in offshore markets can promote China's trade with other countries. "If the yuan is no longer required to convert to other currencies in cross-border transactions, it would reduce the exchange rate risks caused by fluctuations of other currencies, particularly the US dollar," he noted.

The Chinese government has launched a series of measures to promote the yuan's internationalization, such as seeking the inclusion of the yuan in the International Monetary Fund's (IMF) special drawing rights (SDR) along with the euro, US dollar, yen and UK pound.

But experts said the yuan's internationalization might also bring about challenges, such as placing domestic banks under the glare of global economic trends.

But Xu said that China "has the ability" to cope with such risks.

The new system offers several advantages, such as tighter risk management and a friendlier user interface, according to a document Citibank (China) sent to the Global Times on Thursday.

The PBC has established a company in Shanghai in charge of the system's operations.

In 2016, the system's operating company will launch a charging scheme, which only targets the system's direct users.

Xinhua contributed to this story