The Bank of China Hong Kong, the second-largest financial institution in the region, has reached a noteworthy milestone. In completing its first cross-border digital yuan-based trade, the bank achieved a groundbreaking transaction with its counterpart, the Bank of China.
This marks a significant step in acknowledging digital yuan as a viable option for settling international trade payments, particularly in the commodities sector.
Subsequently, the Bank of China facilitated the settlement of a $3.4 million payment related to a bulk commodity trade. Acting as an intermediary, the Hong Kong branch collaborated with its mainland counterpart to establish digital yuan wallets specifically for this transaction.
The funds, totaling $3.4 million, were received under the name of Bao-trans Enterprises. Furthermore, Bao-trans Enterprises is a major player in the production of premium steel products. The payment was made in connection with an order for imported iron ore.
This represents the inaugural instance where the Bank of China has acted as an intermediary in settling a commodity bulk payment through the digital yuan.
Bank of China’s Role in Digital Yuan’s Global Advancements
Xing Guiwei, Deputy Chief Executive of Bank of China, highlighted the benefits of using the Chinese CBDC in this scenario. He highlighted the digital yuan’s versatility, usable for both retail payments and international settlements.
The successful completion of this trial transaction is considered a significant step in normalizing the usage of digital yuan. This accomplishment also fosters the further development of yuan internationalization. Guiwei underscored the broader application of the digital yuan, stating that such endeavors contribute to extending its utility at an international level.
China’s Strategic Moves
China has been actively advancing the internationalization of its digital currency. However, In November, Standard Chartered commenced offering digital yuan exchange services within China.
Concurrently, the People’s Bank of China (PBOC) formed a partnership with the Monetary Authority of Singapore (MAS). This collaboration allows tourists from both countries to spend digital yuan. These initiatives clearly demonstrate China’s commitment to positioning the digital yuan as a prominent player in the global financial landscape.