China once again stands out in the central bank digital currencies (CBDCs) landscape. The Shanghai Oil and Gas Exchange (SHPGX) confirmed that the digital yuan, also known by many as e-CNY, was used for the first time to settle a transaction involving the black gold: oil.
It was on October 19 that PetroChina International closed a historic deal, purchasing 1 million barrels of crude oil using the Chinese central bank’s digital currency. Such a significant financial move with the new currency not only validates confidence in the digital yuan, but also highlights the potential of CBDCs in global trade.
The initiative, as shared by the exchange, came in response to a call made by the Shanghai Municipal Party Committee and the Municipal Government. They encouraged the adoption of e-CNY in international transactions, aiming to further integrate China into the global market and strengthen its position on the global economic stage.
What makes this event even more notorious is its direct impact on the global economy. China Daily, a well-known and respected source, highlighted that this transaction is a “significant breakthrough” for the digital yuan. After all, using a CBDC for such voluminous and strategic negotiations puts the yuan on a new level on the international scene.
Despite the magnitude of the transaction, details about who was selling the oil and the agreed price were not made public. However, to give you an idea, the “OPEC basket”, which encompasses oil from 13 producers, was quoted at 95.72 dollars per barrel on the same day.
The rise of the yuan in the global market is not an isolated event. The data reveals that, over the first three quarters of 2023, the use of the yuan in cross-border agreements grew by a significant 35%, reaching an impressive 1.39 trillion dollars, according to reports from China Daily.
#DEDOLLARIZATION DAILY: 💥PETRODOLLAR SHOCK💥
Shanghai Oil, Gas Exchange Settles First Cross-Border Trade in E-Yuan#DigitalYuan is a game changer!#fintech #finserv@psb_dc@efipm@baoshaoshan@thecyrusjanssen@lajohnstondr@Kathleen_Tyson_@DOualaalouhttps://t.co/8qT4Oq2X1o
— Richard Turrin (@richardturrin) October 22, 2023
And now, with the demonstration that the digital yuan can be used in large international agreements, this trend is expected to solidify even further. The crypto world is watching with great interest as China takes another step forward in its global digital strategy.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.