A Milestone Moment for the Digital Yuan
On October 19, the digital yuan took a significant leap into the global marketplace by being used to settle an oil transaction for the first time. The Shanghai Petroleum and Natural Gas Exchange (SHPGX) reported that PetroChina International purchased a whopping 1 million barrels of crude oil, marking a moment of triumph for the Chinese central bank digital currency (CBDC), also known as e-CNY.
Official Endorsements and Further Insights
This transaction was inspired by directives from the Shanghai Municipal Party Committee and Municipal Government, urging the application of e-CNY in international trade dealings. China Daily hailed the event as “another major step forward” for the digital yuan, further solidifying its role in the oil trade.
Price Comparison and Unveiled Secrets
While the specific seller and transaction price remain undisclosed, we know that the “OPEC basket” price was around $95.72 per barrel on the same day. Now, imagine a digital currency powering the global oil market! It’s like adding a cherry on top of an already thrilling sundae of international finance.
A Shift Towards De-Dollarization
The crude oil deal signifies a larger trend as the yuan continues to carve a substantial niche in international waters. In the first three quarters of 2023, cross-border settlements in the yuan surged by 35% year-on-year, reaching a staggering $1.39 trillion. The implications of this growth could send ripples through the dollar-dominated oil industry and potentially reshape global economic dynamics.
From LNG to Digital Currency Dominance
Before this milestone, the yuan had already been making waves in liquified natural gas (LNG) transactions. Earlier this year in March, the yuan was utilized for an LNG purchase by the China National Offshore Oil Corporation (CNOOC) from TotalEnergies, showing that the digital yuan is not just a one-hit wonder.
New Alliances and Future Prospects
On the same day as the oil transaction, First Abu Dhabi Bank formalized a partnership with the Bank of China regarding digital currency at the recent Belt and Road Forum for International Cooperation. Both countries are engaged in the mBridge platform, which aims to facilitate CBDC cross-border transactions set to launch next year. The future looks promising for the digital yuan as international trade continues to evolve.
