Historic milestone: Chinese digital yuan settles cross-border oil transaction for the first time
Chinese digital yuan has been utilised in landmark international oil transaction, thereby marking a paradigm shift in global finance, with the potential to reshape traditional economic dynamics and foster greater financial inclusivity on the international stage.
Highlights
- PetroChina International, on 19 October, became the first entity to purchase 1 million barrels of crude oil using the digital yuan
- The transaction also aligns with the global trend of de-dollarisation, as nations seek alternatives to the US dollar in international trade transactions.
In a groundbreaking move, the Shanghai Petroleum and Natural Gas Exchange (SHPGX) announced the successful settlement of a cross-border oil transaction using China's central bank digital currency (CBDC), commonly known as the e-CNY. PetroChina International, on 19 October, became the first entity to purchase 1 million barrels of crude oil using the digital yuan, marking a significant milestone in the integration of the digital currency into the global economic landscape.
A major leap in de-dollarisation efforts
Responding to a call by the Shanghai Municipal Party Committee and Municipal Government, the SHPGX facilitated the deal, emphasising the importance of applying the digital yuan to international trade. While specific details about the seller and transaction price remain undisclosed, the move reflects China's commitment to promoting the use of the yuan in cross-border settlements. The transaction also aligns with the global trend of de-dollarisation, as nations seek alternatives to the US dollar in international trade transactions.
Digital yuan gains momentum on international stage
This successful oil deal follows previous milestones in the international use of the yuan. Earlier in the year, the yuan was utilised in liquefied natural gas (LNG) transactions on the SHPGX. Notably, the recent oil transaction signifies a significant leap forward, demonstrating the growing confidence in the digital yuan's stability and reliability for large-scale international deals.
Global collaborations foster cross-border CBDC transactions
In a parallel development, the First Abu Dhabi Bank announced its agreement with the Bank of China, paving the way for digital currency collaborations between nations. The partnership aims to support cross-border transactions through the mBridge platform, facilitating seamless exchanges using central bank digital currencies. This initiative not only strengthens economic ties but also establishes a framework for future international transactions, fostering financial cooperation between nations.
As the digital yuan gains traction in international trade, it marks a paradigm shift in global finance, with the potential to reshape traditional economic dynamics and foster greater financial inclusivity on the international stage.
