The Bank of China has achieved a major milestone in digital currencies with the completion of the world’s first cross-border Central Bank Digital Currency (CBDC)-driven precious metals deal. On December 20, 2023, the Bank of China’s Shanghai branch successfully executed an e-CNY CBDC settlement of 100 million yuan ($14 million) received abroad for gold through the Shanghai Financial Exchange International Board. This historic transaction underlines the growing acceptance and utility of digital currencies in international trade, especially in the precious metals sector.
The successful settlement demonstrates the strategic role that the digital yuan, or e-CNY, is beginning to play in China’s international trade efforts. Initially intended for domestic retail use, the People’s Bank of China (PBoC) and its partner banks have expanded the scope of the e-CNY to international trade. This transaction follows the Bank of China’s recent facilitation of a $3.4 million digital payment for iron ore, the first cross-border commodity transaction using the e-CNY. The Bank of China is one of China’s largest commercial banks and was among the first banks to participate in the digital yuan pilot program.
The recent activities indicate China’s accelerated efforts to integrate the digital yuan into the global financial system. Chinese President Xi Jinping has emphasized the importance of CBDCs in cross-border trade. The PBoC is actively exploring the use of e-CNY with partner countries of the Belt and Road Initiative (BRI) and members of the Association of Southeast Asian Nations (ASEAN). In addition, there have been developments in Singapore and Taiwan regarding the use of e-CNY. This cross-border arrangement for gold is a clear indication of China’s intentions to position e-CNY as a major player in the international financial world.
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