In a recent report, the Chinese authority successfully completed its first-ever cross-border transaction with the country’s central bank digital currency, e-CNY (digital yuan), during a current oil deal executed by PetroChina International. The epic transaction was reportedly part of the Shanghai Petroleum and Natural Gas Exchange’s plan to offer a solid solution that meets the Shanghai municipal government’s request for cross-border use of digital yuan.
According to the report, the Chinese digital yuan has been used to execute an international oil deal for the first time. The Shanghai Petroleum and Natural Gas Exchange (SHPGX) disclosed that the transaction was conducted by PetroChina International, who purchased 1 million crude oil barrels with e-CNY recently. Nonetheless, the total sum of the digital yuan used to settle the transaction is yet to be disclosed, as well as the name of the seller.
China Bought 1 Million Oil Barrels With Digital Yuan
Furthermore, the report revealed that the Shanghai municipal government demanded that the digital yuan should be used in major international trade as part of its testing. In alignment with the requirement, SHPGX reportedly executed the epic cross-border transaction, using e-CNY to purchase the 1 million barrel of oil. Also, the exchange remarked that the deal was a huge step forward toward the development and issuance of Chinese CBDC.
It is worth noting that the significant financial achievement occurred after the country had used its traditional yuan currency to fund many oil and gas purchases over time. In addition, the report revealed that in March, the conventional yuan became widely used for international trade globally. Also in the same month, SHPGX reportedly executed its first purchase of liquified natural gas with fiat yuan as the China National Offshore Oil Corporation imported oil from the French TotalEnergies.
Digital Yuan Usage Records Significant Increase
In addition, the yuan was reportedly used for about 49% of China’s International trades in the first quarter of 223, exceeding the United States Dollar usage for the first time. In February, China recorded a cross-border payment worth about $434.5 billion; however, the rate increased significantly in March as the country accounted for about $549.9 billion in payment with yuan. Given the recent rapid increase in adoption and usage of the traditional yuan, the Chinese government is anticipating the same positive reaction to the digital yuan.
Meanwhile, the People’s Bank of China, alongside the Hong Kong Monetary Authority, has been reportedly working and executing test pilots to examine the use cases of the digital yuan for settlement of international trades since late 2020. According to the report, their main target was to provide a seamless and more effortless means of payment settlement for tourists visiting China.
Chinese Authorities To Facilitate e-CNY Adoption
In addition, the tests were being carried out in restaurants and retail merchants, transport, JD.com retailers, and some UBuy stores where users were able to spend their digital yuan holdings. The outcome of the test was quite mixed as about 500 and 2,100 people participated in the exercise in December 2020 and January 2023, respectively. Also, some participants complained about having challenges while processing transactions with the digital yuan.
Nonetheless, the Chinese government is facilitating the adoption of digital yuan in multiple cities and enhancing the use cases of the CBDC. Currently, the e-CNY has several utility cases, which cover the payment for services and goods, buying tickets for flights, e-CNY wallets based on SIM cards, as well as paying workers’ salaries in the Jiangsu province.
Furthermore, reports showed that the People’s Bank of China is currently planning and working on issuing unified QR code formats that would allow users to pay for goods and services using the e-CNY. The bank also plans to allow users to use digital yuan via online settlement providers like UnionPay QuickPass, WeChat Pay, Alipay, and other prominent providers that are used in the country.
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