Bank of China Completes First Precious Metal Settlement with Digital Yuan
The Bank of China’s Shanghai branch has successfully completed the first-ever settlement of precious metals using the digital yuan, China’s central bank digital currency (CBDC). Working alongside the Shanghai Gold Exchange, the bank facilitated the transfer of funds received overseas using the digital yuan. The transaction involved exchanging $14 million for undisclosed precious metals, marking a significant milestone for the use of the Chinese digital yuan in the fine metal trade.
Shanghai’s Role as an International Financial Hub
The Shanghai branch of the Bank of China emphasized the importance of this transaction in positioning Shanghai as an international financial hub. According to a spokesperson, this trade will contribute to the city’s efforts to implement the free trade pilot zone promotion strategy and enhance the quality and development of the international trade center.
Expanding Usage of the Digital Yuan
This achievement is the Bank of China’s second milestone using the digital yuan in December. Earlier in the month, it facilitated a transaction between its Shanghai and Hong Kong branches, enabling the settlement of an imported iron ore payment. China is also taking steps to introduce international digital yuan retail payments and has partnered with the Monetary Authority of Singapore to implement a pilot program enabling tourists to use the digital yuan for tourism purposes in both countries.
Hot Take: Digital Yuan Making Inroads in Precious Metal Trade and Global Payments
The successful completion of a precious metal settlement using the digital yuan by the Bank of China is a significant development for the adoption of China’s CBDC. This milestone showcases the potential of the digital yuan to revolutionize cross-border transactions, particularly in the fine metal trade. Additionally, China’s efforts to introduce international digital yuan retail payments demonstrate its commitment to positioning the digital yuan as a globally recognized currency. As more use cases and partnerships emerge, the digital yuan is poised to make further inroads in the financial and international trade sectors.
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