Increase in Cross-Border Trade Using Digital Yuan
The Shanghai Petroleum and Natural Gas Exchange (SHPGX) has made a significant step in the adoption of China’s Central Bank Digital Currency (CBDC) for cross-border trade. PetroChina International recently purchased one million barrels of crude oil using the digital yuan, responding to the Shanghai Municipal Party Committee and Municipal Government’s call to use the CBDC in international trade. While specific details about the transaction were not disclosed, this move highlights the growing role of the digital yuan in cross-border commerce.
Advancing Global Acceptance of Digital Yuan
This purchase is part of China’s broader efforts to boost the use of the yuan on the global stage and reduce reliance on the US dollar. Cross-border settlements denominated in yuan have increased by 35% year-on-year, reaching $1.39 trillion in the first three quarters of 2023. This growth demonstrates the increasing acceptance of the digital yuan in international commerce. Additionally, First Abu Dhabi Bank and the Bank of China have announced an agreement to explore the use of digital currencies, further promoting cross-border transactions using CBDC.
Progress and Expansion of Digital Yuan
The digital yuan, also known as e-CNY, began its pilot phase in January 2022 and became one of the first Central Bank Digital Currencies available on Android and iOS platforms. Since then, it has made significant progress, with approximately 13.61 billion digital yuan in circulation, accounting for around 0.13% of the monetary supply. Its use has expanded into various sectors, including China’s Belt and Road Initiative, consumer airdrops, and everyday transportation payments.
China’s Advanced Position in CBDC Development
While many countries are exploring their own Central Bank Digital Currencies, China’s digital yuan stands out as one of the most advanced. By the end of June, transactions using the digital yuan had reached a staggering 1.8 trillion yuan ($250 billion), constituting 0.16% of the cash in circulation. The digital yuan’s increasing adoption in cross-border trade and its expanding use in domestic transactions demonstrate its potential to reshape global finance and reduce reliance on traditional currencies.
Hot Take: The Digital Yuan Continues to Make Strides in Cross-Border Trade
The recent purchase of crude oil using China’s Central Bank Digital Currency (CBDC), the digital yuan, marks a significant milestone for the currency’s adoption. As PetroChina International executes this historic transaction, it underlines the growing role of the digital yuan in cross-border commerce. With efforts to expand its global acceptance and reduce reliance on the US dollar, the digital yuan is making progress in becoming a prominent player in international finance. As more countries explore their own CBDCs, China’s advanced position with the digital yuan positions it as a leader in shaping the future of digital currencies and cross-border transactions.
By
By
By
By
By