In a significant development for digital currency, the Bank of China Hong Kong, a major financial player in the region, has successfully executed its first cross-border transaction using the digital yuan. The landmark trade involved a payment for an imported iron ore commodity bulk trade, marking a new chapter in the use of the digital yuan for such transactions.
The Bank of China Pioneers $3.4 Million Commodity Trade with Digital Yuan The Bank of China is spearheading the use of the digital yuan, China’s central bank digital currency (CBDC), for cross-border payments. The bank’s Hong Kong branch, a key financial institution in the region, facilitated a significant transaction involving the settlement of a $3.4 million bulk commodity payment. The trade was between Baosteel Group, a prominent steel and iron company, and Bao-trans Enterprises, known for its high-quality steel products.
Both the Hong Kong branch and its counterpart on the mainland set up digital yuan wallets to facilitate this trade, acting as the recipient of the funds for Bao-trans Enterprises for their shipment of imported iron ore. Local media reports have indicated that this is the first instance of the bank acting as an intermediary in a commodity bulk settlement using the digital yuan.
Xing Guiwei, the Deputy Chief Executive of Bank of China Hong Kong, highlighted the effectiveness of the Chinese CBDC in these kinds of transactions. He sees the digital yuan as a versatile tool, useful not only for retail payments but also for international settlements.
Guiwei emphasized the significance of this transaction in promoting the global use of the digital yuan, stating:
The successful trial transaction can be helpful for the normalization of digital yuan usage among corporates and the further development of yuan internationalization.
China’s efforts to globalize its digital currency are gaining momentum. Recent developments include Standard Chartered initiating digital yuan exchange services in China and the People’s Bank of China collaborating with the Monetary Authority of Singapore to facilitate the spending of digital yuan by tourists from both countries.