The Bank of China’s Shanghai branch has completed the first cross-border settlement using China’s digital yuan, or e-CNY, for precious metals. On December 20, the bank processed a 100 million yuan ($14 million) transaction for gold via the Shanghai Financial Exchange International Board.
This transaction marks a new milestone in the use of China’s digital currency, with the Bank of China Shanghai at the forefront of these efforts. The branch has been a key participant in the digital yuan’s pilot tests and has recently used the e-CNY for importing iron ore into China. It has also been collaborating with international banks like France’s BNP Paribas to expand the digital yuan’s reach.
China’s e-CNY stands out as one of the most advanced central bank digital currency (CBDC) projects among the world’s major economies. While the initial focus of the project is domestic, cross-border trials in Hong Kong have been gaining momentum.
The use of the digital yuan in international trade was highlighted by Chinese President Xi Jinping at the Shanghai Cooperation Organisation Summit in July 2023. Following his address, various foreign banks have joined China’s CBDC trials. Additionally, Singapore has opened its doors to Chinese tourists using digital yuan, and a $400 million memorandum on CBDC cooperation was signed with the United Arab Emirates on December 1.
Moreover, the latest update of the official digital yuan app, released on December 19, introduces new features. These include the ability to create a digital yuan wallet using a phone number, wallet disabling in case of phone loss, and resetting of passwords and private keys. Users can also link their bank accounts and debit cards to purchase digital yuan directly in the app.
“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,” a spokesperson for the Bank of China wrote. Top of Form
China’s push to develop a central bank digital currency has positioned the e-CNY as a frontrunner among similar initiatives by other major economies. With transaction volumes reaching 1.8 trillion yuan ($250 billion) by mid-2022, the digital yuan’s adoption and integration into the banking sector are gaining momentum.