The Bank of China recently made history by completing the world’s first cross-border CBDC-powered precious metals deal. The transaction, valued at approximately $14.1 million, involved the Shanghai Branch of the Bank of China, the bank’s Hong Kong branch, and the Shanghai Gold Exchange.
As one of the Mainland’s largest commercial banks, the Bank of China was among the first to join the pilot for this innovative transaction. Just days prior to this, the bank processed a $3.4 million digital yuan payment for an iron ore deal, marking the first cross-border commodity transaction using the e-CNY.
China’s Shift in Digital Yuan Strategy
This year has witnessed a significant shift in China’s approach to the digital yuan’s international use. Previously, the central People’s Bank of China (PBoC) emphasized that the digital currency was primarily intended for domestic retail use. However, the PBoC and its partner banks have concluded the year with a flurry of cross-border activities.
Notably, there have been trade deals with Hong Kong, as well as developments in Singapore and Taiwan. The PBoC has also expressed its intention to leverage the e-CNY for business with Belt and Road Initiative (BRI) partner nations and the Association of Southeast Asian Nations (ASEAN) members.
Foreign Banks Join Digital Yuan Initiative
Four overseas banks with a presence in China have recently joined the list of digital yuan partners, bringing the total to 60 banks. Among them is BNP Paribas (China), the Chinese arm of the France-based bank headquartered in Shanghai. BNP Paribas (China) is actively supporting foreign financial institutions in carrying out digital yuan-related business activities.
It is worth noting that BNP Paribas has faced criticism from United States lawmakers due to its involvement in the pilot. Concerns have been raised about the potential use of the digital yuan for surveillance purposes on Chinese citizens and visitors to China.
“[The digital yuan] may be used to surveil Chinese citizens and those visiting China on an unprecedented scale.” – United States lawmakers.
