Petrochina Makes Historic Digital Yuan Payment in Commodities Market
Petrochina, the largest oil and gas producer in Asia, has made history by completing a settlement using the digital yuan, China’s central bank digital currency (CBDC). The company purchased one million crude barrels through the Shanghai Oil and Gas Trading Center platform, making it the first time the digital yuan has been used for payment in the commodities market.
Advancing the Use of Digital Yuan in Commodity Payments
Petrochina, a subsidiary of China National Petroleum Corporation (CNPC), utilized the Shanghai Oil and Gas Trading Center platform to carry out the purchase. This move represents a significant step forward in incorporating digital yuan settlements into commodity transactions.
The inclusion of digital yuan settlements in the Shanghai Oil and Gas Trading Center aligns with efforts by the Shanghai Municipal Party Committee and Municipal Government to promote the use of the currency. However, the counterparty involved in this specific operation has not been disclosed.
Chinese Yuan’s Internationalization
While most efforts to introduce the digital yuan have focused on retail applications, such as introducing an interoperable QR code for direct payments, the Shanghai Clearing House previously announced its support for using digital yuan to settle bulk commodities payments without processing fees.
By utilizing the digital yuan for this transaction, Petrochina contributes to China’s ongoing efforts to reduce reliance on the U.S. dollar for payments and settlements. The potential impact of digital yuan on challenging the dollar’s dominance in international markets has been extensively debated by experts.
Differing Opinions on Digital Yuan’s Influence
Oriol Caudevilla, a financial and web3 speaker, believes that widespread adoption of the digital yuan outside of China could lead to a parallel trade and finance system that bypasses the global banking system and U.S. sanctions. However, François Chimits, an analyst at Merics, disputes this notion and argues that the digital yuan is unlikely to significantly increase foreign access to or trust in the yuan.
Nevertheless, even in its fiat form, the yuan is gaining traction in international markets and has recently surpassed the euro as the second most used currency in trade finance.
Hot Take: Petrochina Sets a New Milestone for Digital Yuan
Petrochina’s completion of a commodities settlement using the digital yuan marks a significant milestone for China’s central bank digital currency. By embracing the digital yuan for such a substantial transaction, Petrochina contributes to China’s goal of reducing reliance on the U.S. dollar. While experts have differing opinions on the digital yuan’s potential impact on challenging the dollar’s dominance, its use in international markets is steadily growing. As China continues to advance its digital currency initiatives, it will be interesting to observe how they shape the global financial landscape.
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