Central Bank Digital Currencies (CBDCs) are expanding. For the first time ever, a cross-border settlement for precious metals was done using the digital yuan, the virtual version of the Chinese yuan. This shows that the most powerful countries in the world are planning to launch their central bank digital currencies in the near future.
Digital Yuan Marks First Cross-Border Precious Metals Settlement
China is leading the way when it comes to central bank digital currencies. The Chinese government registered the first cross-border precious metal settlement using the e-CNY (the digital yuan). The transaction involved sending 100 million yuan (worth close to $14 million) for gold using the Shanghai Financial Exchange International Board.
The Asian country has been working in order to create and release its own central bank digital currency. This development shows that China is moving forward in terms of implementation. Thanks to this pilot transaction, the country will have the possibility to strengthen Shanghai’s position in the international trade scene.
There are several companies involved in the implementation of a Digital Yuan. One of those companies is Standard Chartered. Thanks to this and other collaborations with foreign institutions, it is possible for China to go ahead with new digital implementations of its currency.
CBDCs have been a hot topic in recent years. Multiple countries and central banks are working on a digital version of their fiat currencies. For example, a few months ago, the European Central Bank (ECB) announced that the Governing Council was ready to start the digital euro preparation phase after a two-year investigation period.
The report released by the ECB reads as follows:
“The preparation phase will lay foundations for a potential digital euro, with work to include finalising rulebook and selecting providers to develop platform and infrastructure.”
Therefore, China is not alone in the creation of a digital currency. It is just a matter of time before we see the first ones operating in real-world environments.