In a historic move, the first-ever cross-border settlement for precious metals using the digital yuan, also known as the e-CNY (Central Bank Digital Currency), was successfully executed in 2023.
The transaction, valued at 100 million yuan (approximately $14 million), was facilitated by the Shanghai Financial Exchange International Board and orchestrated by the Bank of China’s Shanghai branch.
This milestone achievement marks a significant step in the integration of digital currencies into the global financial landscape.
Bank of China pioneers Cross-Border e-CNY settlement
The Bank of China’s Shanghai branch played a pivotal role in making this groundbreaking transaction a reality. The branch successfully transferred the e-CNY settlement received from overseas to acquire gold via the Shanghai Financial Exchange International Board.
This pioneering initiative showcases the potential of digital currencies, particularly the e-CNY, in facilitating international trade and cross-border settlements.
A spokesperson for the Bank of China expressed their enthusiasm, stating,
“The account will contribute financial strength to support Shanghai’s in-depth implementation of the free trade pilot zone promotion strategy and promote the quality and upgrading of the international trade center.”
Bank of China’s commitment to digital Yuan
The Bank of China’s Shanghai branch has been at the forefront of digital yuan pilot testing. Notably, they recently facilitated the import of iron ore to China through the e-CNY. The bank has also forged partnerships with foreign financial institutions, including France’s BNP Paribas, to collaborate on developing and utilizing the digital yuan.
This commitment aligns with the broader vision of China’s leadership, as Chinese President Xi Jinping emphasized the importance of Central Bank Digital Currencies (CBDCs) in cross-border trade during the July 2023 Shanghai Cooperation Organisation Summit.
Since then, several foreign banks have joined China’s ongoing CBDC trials, and countries like Singapore have even announced plans to allow Chinese tourists to use the digital yuan for transactions within their borders.
China’s efforts to promote the e-CNY extend beyond its borders. China entered into a memorandum of cooperation worth $400 million with the United Arab Emirates to further explore and develop CBDC initiatives. This demonstrates China’s commitment to fostering international collaboration in the realm of digital currencies.
Enhancements to the digital Yuan app
An updated version of the official digital yuan app was released. This latest iteration offers several user-friendly features, including creating a digital yuan wallet using a phone number, enabling users to disable their wallet if their phone is lost, and allowing for resetting passwords and private keys.
Additionally, users can now link their personal bank accounts and debit cards to purchase digital yuan directly within the app.
The road ahead for e-CNY and digital currencies
As the world continues to grapple with the rapid evolution of digital currencies and their potential impact on global finance, China’s strides in implementing the e-CNY and fostering international collaboration are closely watched by financial institutions and governments worldwide.
The successful execution of a cross-border e-CNY settlement for precious metals serves as a testament to the viability and potential of CBDCs in facilitating international trade and financial transactions.
