China’s central bank digital currency (CBDC), the digital yuan, has now been used to complete the first-ever cross-border settlement for precious metals using a CBDC, according to a local news report.
The transaction was conducted on Tuesday by the Bank of China's (BoC) Shanghai branch, in cooperation with the Shanghai Gold Exchange, and involved the transfer of 100 million digital yuan ($14 million) in exchange for gold.
“We collaborated with the Shanghai RMB Trading Business Headquarters of the Bank of China and BOC Hong Kong to complete this business and successfully transferred the funds received overseas to the Shanghai Financial Exchange International Board Free Trade RMB in the form of digital RMB payment,” said a representative from the Shanghai Branch of the Bank of China. “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.”
The BoC Shanghai has been one of the leading supporters of digital yuan pilot testing and previously facilitated the import of iron ore to China via the e-CNY. The bank also partnered with BNP Paribas to launch a digital renminbi project and provides a support system for foreign financial institutions to meet business needs such as digital RMB payment for enterprises.
In July, China's President Xi Jinping discussed the importance of CBDCs in cross-border trade during an address to the Shanghai Cooperation Organisation (SCO) Summit. Since then, multiple foreign banks joined the ongoing digital yuan trials, including Standard Chartered, Hong Kong-based HSBC, Hang Seng Bank, and Taiwanese bank Fubon Bank.
At the beginning of December, China signed a $400 million memorandum on CBDC cooperation with the United Arab Emirates. And on Tuesday, the government of China released the latest update for the e-CNY app which now allows users to create an e-CNY wallet using their phone number, disable their wallet in case their phone is lost, and reset their password and private keys. Users can also bind their personal bank accounts and debit cards to purchase digital yuan directly through the wallet.
