Digital Yuan Flexes Muscles in China’s Latest Gold Transactions

YEREVAN (CoinChapter.com) — The Shanghai division of the Bank of China recently executed its first transaction involving precious metals using the digital yuan, China’s official central bank digital currency (CBDC).

China Buys Gold in CBDC

This pioneering settlement, completed on Dec 19, enabled the Shanghai Gold Exchange to finalize a precious metal trade worth $14 million, a deal facilitated by receiving funds from abroad, as reported by local media.

Local reports highlight this as the inaugural instance of utilizing the Chinese digital yuan for a fine metal trade. A representative from the Shanghai branch of the Bank of China emphasized the significance of this transaction in establishing Shanghai as a global financial center.

The account will contribute financial strength to support Shanghai’s in-depth implementation of the free trade pilot zone promotion strategy and promote the quality and upgrading of the international trade center.

said the Spokesman

Not the First Foray Into Digital Yuan

This event marks the Bank of China’s second significant achievement with the CBDC this month. On Dec 14, the bank carried out a transaction between its Shanghai and Hong Kong branches.

This involved a payment settlement for Baosteel Group, a major steel and iron producer, and Bao-trans Enterprises, a high-end steel product manufacturer. The transaction, involving a $3.4 million payment for imported iron ore, represented the digital yuan’s first foray into the commodities market.

Moreover, China is advancing its international digital yuan initiatives. Recently, the government collaborated with the Monetary Authority of Singapore (MAS) on a pilot program. This program aims to facilitate tourists’ use of the digital yuan for transactions in both countries. According to officials, it will also promote tourism. Notably, Singapore also dabbed into CBDCs.

The Monetary Authority of Singapore (MAS) will initiate a pilot program for a Singapore CBDC. It will be used for bank settlements, as announced in mid-November.

In short, CBDCs allow the Chinese government to utilize blockchain technology for faster and more efficient transactions without giving up control over the market. The ruling Communist Party had a rocky relationship with Bitcoin and its mining. However, it was happy to deal with digital yuan for obvious reasons.