Blockchain for Banking News

China uses digital RMB to settle first cross border oil transaction

oil tanker ship

PetroChina will settle a crude oil transaction for one million barrels of oil using the digital RMB (eCNY). This is the first cross border oil transaction using the central bank digital currency (CBDC).

No mention was made of the exporter in the news item from Shanghai Securities News. However, we reported yesterday about digital currency agreements between China and the United Arab Emirates (UAE).

In late September, as part of the China-Arab Business Summit, an entire mini event focused on discussions about using local currency. Additionally, in a China-Gulf Summit in late 2022 attended by President Xi Jinping, he prioritized the RMB settlement of oil and gas transactions. Chinese imports amount to RMB 3 trillion ($410bn) annually.

The Shanghai Oil and Gas Trading Center platform hosted the CBDC transaction and was mentioned by President Xi as part of the push for renminbi settlement. In March, China National Offshore Oil Corporation (CNOOC) used the platform to settle its first liquefied natural gas (LNG) in RMB (not digital). France’s Total was the seller and the gas came from the UAE.

Earlier this week, CNOOC executed another renminbi-denominated gas transaction with the Singapore arm of ENGIE. That will settle via China’s RMB Cross-border Payment System (CIPS) rather than using the CBDC.

The fact the press considers these transactions newsworthy means they are not yet commonplace.

Meanwhile, at the recent BRICS Summit, the members committed to using local currency more regularly for trade.

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