Chinese cryptocurrency CBDC was utilized for the first time to pay an international oil transaction

Last week’s 1 million-barrel trade on the Shanghai Petroleum and Natural Gas Exchange was a huge step forward for CBDC and de-dollarization.

The Shanghai Petroleum and Natural Gas Exchange (SHPGX) has revealed that the digital yuan has been utilized to settle an oil transaction for the first time. On October 19th, a million barrels of oil were purchased by PetroChina International.

According to the exchange, the deal was made in response to a request by the Shanghai Municipal Party Committee and Municipal Government to expand the use of the Chinese central bank digital currency (CBDC), also known as the e-CNY, to foreign commerce. In the words of the government-run China Daily, this is “another major step forward” for the digital yuan.

Both the identity of the seller and the total cost of the deal were kept secret. The average price of oil from the “OPEC basket” of 13 countries on October 19 was $95.72 a barrel.

An important milestone in the internationalization of the yuan and the de-dollarization of world trade has been reached with the crude oil agreement. China Daily said that by the end of the third quarter of 2023, the total amount of yuan used in international transactions had risen to $1.39 trillion, a 35% year-on-year increase.

In March, the yuan was used for the first time to buy liquified natural gas (LNG) on SHPGX. TotalEnergies, a French company, decided to sell LNG to CNOOC. Last week, CNOOC and French Engie signed the second yuan-denominated LNG contract in the world. In such deals, the digital yuan was not used.

An agreement on digital currency between First Abu Dhabi Bank and the Bank of China, the state-owned commercial bank of China, was also revealed on October 19 after the conclusion of the third Belt and Road Forum for International Corporation. The mBridge platform facilitates international trade between China and the United Arab Emirates, of which Abu Dhabi is a member. MBridge plans to release a minimal viable product sometime in 2024.

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