Shanghai performs the world’s first cross-border settlement using the digital yuan

The Bank of China’s Shanghai branch has successfully executed a 100-million-yuan ($14 million) payment using its central bank digital currency (CBDC), e-CNY. Local sources indicate the overseas settlement was performed via the Shanghai Financial Exchange International Board for gold. The settlement occurred on December 20.

A Bank of China spokesperson commented on the successful settlement:

The milestone is significant for the Bank of China Shanghai, which has been on the frontline in e-CNY pilot tests. The e-CNY implementation reinforces Shanghai’s free trade pilot zone promotion strategy as it seeks to become an international trade centre. Lately, the bank enabled the importation of iron ore to China using digital currency.

Global e-CNY CBDC tests to drive adoption

China has been ramping up e-CNY experimentation even as the country seeks to free itself from dollar dependence. Global pilot testing saw China sign a $400 million memorandum with the United Arab Emirates for CBDC cooperation on December 1. China also has cooperated with several institutions, including the British banking giant Standard Chartered, for e-CNY tests.

More recently, China released its latest version of the digital yuan app. The updated version offers enhanced functionalities and allows users to connect debit cards and personal bank accounts to buy digital currency.

China’s President Xi Jinping has vehemently supported CBDCs, believing they are key to unlocking cross-border payments. The support comes despite the country’s hard stance on digital assets, having banned cryptocurrency transactions in 2021. As of July this year, the e-CNY transactions surpassed 1.8 trillion yuan ($250 billion) worth of transactions since its launch less than two years ago.