The Bank of China Completes World’s First Cross-Border CBDC-Powered Precious Metals Deal
The Bank of China has achieved a significant milestone in the digital currency space by completing the world’s first cross-border Central Bank Digital Currency (CBDC)-powered precious metals transaction. In December 2023, the Bank of China’s Shanghai branch successfully settled a 100 million yuan ($14 million) e-CNY CBDC payment for gold via the Shanghai Financial Exchange International Board. This groundbreaking deal highlights the increasing acceptance and utility of digital currencies in international trade, particularly in the precious metals sector.
Digital Yuan Expands its Role in International Trade
This successful settlement demonstrates the strategic role that China’s digital yuan, or e-CNY, is starting to play in the country’s international trade efforts. Initially designed for domestic retail use, the People’s Bank of China (PBoC) and its partner banks have broadened the scope of e-CNY to include international trade. This transaction follows a recent $3.4 million digital yuan payment facilitated by the Bank of China for iron ore, which was the first cross-border commodity deal using e-CNY. As one of China’s largest commercial banks and an early participant in the digital yuan pilot program, the Bank of China is actively driving its adoption.
China’s Accelerated Integration of Digital Yuan into Global Finance
These recent developments highlight China’s accelerated efforts to integrate its digital yuan into the global financial system. Chinese President Xi Jinping has emphasized the significance of CBDCs in cross-border trade. The PBoC is actively exploring the use of e-CNY with Belt and Road Initiative (BRI) partner nations and members of the Association of Southeast Asian Nations (ASEAN). Furthermore, progress has been made in Singapore and Taiwan regarding the adoption of e-CNY. The cross-border settlement for gold clearly demonstrates China’s intention to establish e-CNY as a major player in international finance.
Hot Take: China’s Digital Yuan Makes Waves in Cross-Border Precious Metals Trade
The Bank of China’s completion of the world’s first cross-border CBDC-powered precious metals deal using the digital yuan marks a significant milestone in the adoption of digital currencies in international trade. This transaction highlights the growing acceptance and utility of digital currencies, specifically in the precious metals sector. China’s accelerated efforts to integrate its digital yuan into the global financial system demonstrate its commitment to establishing e-CNY as a key player in international finance. With successful settlements for both iron ore and gold, the digital yuan is expanding its role beyond domestic retail use, indicating its potential for revolutionizing cross-border transactions across various industries.
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