(CTN News) – Amid the ongoing efforts to reduce the dominance of the US dollar in international transactions, China has marked a significant milestone by completing its first international oil trade using its Central Bank Digital Currency (CBDC), the digital yuan.
This landmark deal, involving Chinese oil giant PetroChina and settled in the e-CNY, took place at the Shanghai Petroleum and Natural Gas Exchange. This move not only demonstrates China’s determination to de-dollarize but also paves the way for similar transactions in other sectors and nations.
In this article, we’ll delve into the details of this historic transaction and its implications for China and the BRICS economic alliance.
China’s Digital Yuan Used in International Oil Settlement
PetroChina, one of China’s major oil companies, recently made history by purchasing 1 million barrels of crude oil using the digital yuan at the Shanghai Petroleum and Natural Gas Exchange.
While the exact value of the deal and the seller’s identity were not disclosed, this transaction highlights China’s commitment to promoting its digital currency in international trade. The move comes as part of a broader strategy to reduce the global reliance on the US dollar, which has been a central goal for China in recent years.
China’s De-dollarization Efforts:
China’s de-dollarization strategy has gained momentum in the past year, and the digital yuan, or e-CNY, is at the forefront of this endeavor. The country aims to increase the use of the renminbi (RMB) in international settlements, diminishing the dominance of the US dollar.
This oil transaction in the digital yuan is a tangible step toward achieving this goal, as it showcases the practicality and potential for China’s CBDC in real-world trade scenarios.
BRICS and Digital Currencies:
The BRICS economic alliance, consisting of Brazil, Russia, India, China, and South Africa, has been exploring alternatives to the US dollar in international trade for some time. Digital currencies have emerged as a promising avenue for achieving this objective.
The use of the digital yuan in international oil settlements may serve as a model that other BRICS members and nations can follow. By diversifying their currency options and promoting their local currencies in global trade, the alliance is moving closer to reducing their collective dependence on the US dollar.
China’s successful completion of the first international oil transaction using the digital yuan is a significant step in the ongoing process of de-dollarization. This development not only showcases the practicality of China’s CBDC but also underscores its commitment to promoting the renminbi in global trade.
As the BRICS alliance seeks to diversify currency options and lessen their reliance on the US dollar, this pioneering transaction in the digital yuan may inspire similar endeavors in other sectors and nations, further accelerating the de-dollarization process in the global economy.