[NEWS] China conducts first crude oil transaction using digital yuan

It has been discovered that China's CBDC (central bank digital currency), the digital yuan, has been used in crude oil trading for the first time. On the 19th, the Shanghai Petroleum and Natural Gas Trading Center (SHPGX) announced that PetroChina International conducted a crude oil transaction using the digital yuan on its platform.

According to the announcement, 1 million barrels of crude oil were purchased. The seller and the transaction price were not disclosed.

In its announcement, the exchange said that the transaction was a cross-border transaction and was part of SHPGX's efforts to address the requirements of the Shanghai Municipal Party Committee and the municipal government to "actively use the digital yuan in international trade."

It added that "as we expand our business in domestic and overseas markets, the exchange will provide domestic and overseas markets with fast, stable and efficient trading and settlement to meet a wide range of needs. This will also enable international capital to further explore the Chinese market."

Ming Ming, chief economist at state-owned CITIC Securities, told China Daily that the digital yuan should be fully utilized to promote cross-border yuan settlement and the internationalization of the Chinese currency.

The digital yuan settlement came two days after CNOOC and French energy company Engie (Enfie.Pa) completed a liquefied natural gas (LNG) transaction through SHPGX on the 17th.

According to the exchange, Engie will supply 65,000 tonnes of LNG to CNOOC in November under the contract. The transaction follows China's first yuan-based LNG transaction between CNOOC and French energy giant Total Energies through SHPGX in March.

According to the Institute for World Interbank Financial Telecommunication, the yuan was the fifth most used currency for settlement in the world by value as of September, accounting for 3.71% of the market share. Overall, the amount of RMB settlements in September increased by 2.77% from August, while the amount of settlements in other key currencies decreased by 3.96%.

In terms of international settlements excluding settlements within the euro zone, the RMB ranked 6th in September with a market share of 2.73%. According to data released by the People's Bank of China, the central bank, the amount of cross-border RMB settlements through current accounts reached a total of 10.16 trillion RMB (about 208 trillion yen) in the first three quarters of this year, up 35% from the same period last year.

In June, the Central Bank of Argentina announced that it would allow deposits and withdrawals of RMB in the Argentine banking system. The Central Bank of Brazil also announced that the RMB has surpassed the euro to become the country's second largest international key currency.

China is at the forefront of the world in the CBDC field. It is said that China is considering seizing currency hegemony through the digital RMB, and future developments will continue to attract attention.

Reference: Announcement,Report
Image: Shutterstock