Sunday, February 25, 2024
Blockchain

Bank of China Achieves Groundbreaking $14 Million e-CNY CBDC Settlement in Gold

The Bank of China has marked a significant milestone in the realm of digital currency with the completion of the world’s first cross-border Central Bank Digital Currency (CBDC)-powered precious metals deal. On December 20, 2023, the Bank of China’s Shanghai branch successfully conducted a 100 million yuan ($14 million) e-CNY CBDC settlement received overseas for gold via the Shanghai Financial Exchange International Board. This historic transaction underlines the growing acceptance and utility of digital currencies in international trade, especially in the precious metals sector.

The successful settlement showcases the strategic role the digital yuan, or e-CNY, is beginning to play in China’s international trade endeavors. Initially envisioned for domestic retail use, the People’s Bank of China (PBoC) and its partner banks have expanded the e-CNY’s scope to include international trade. This transaction follows the Bank of China’s recent facilitation of a $3.4 million digital yuan payment for iron ore, which was the first cross-border commodity deal using the e-CNY. The Bank of China is one of China’s largest commercial banks and was among the first banks to join the pilot program for the digital yuan.

The recent activities signify China’s accelerated efforts in integrating the digital yuan into the global financial system. Chinese President Xi Jinping has emphasized the importance 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 Association of Southeast Asian Nations (ASEAN) members. Additionally, there have been developments in Singapore and Taiwan regarding e-CNY’s use. This cross-border settlement for gold is a clear indication of China’s intentions to position e-CNY as a key player in international finance.

Image source: Shutterstock

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