Yes, the Shanghai Oil and Gas Exchange’s settlement of its first cross-border trade in e-yuan is a game changer. It is the first time that a major commodity exchange has used a central bank digital currency (CBDC) to settle a trade. This is a significant milestone in the development of CBDCs and could have a major impact on the global financial system.
The use of CBDCs for cross-border trade has several advantages. First, it can reduce the cost and time of transactions. Second, it can make it easier for businesses to trade with each other, regardless of their location. Third, it can reduce the risk of fraud and financial crime.
The successful settlement of the first cross-border trade in e-yuan is a sign that China is serious about promoting the use of its CBDC internationally. China is already the world’s largest trading nation, and the use of the e-yuan for cross-border trade could help to further increase China’s economic influence.
The use of CBDCs for cross-border trade could also challenge the dominance of the US dollar in the global financial system. The US dollar is currently used to settle the vast majority of international trade transactions. However, the use of CBDCs could make it easier for businesses to trade with each other using their own currencies. This could reduce the reliance on the US dollar and make the global financial system more diversified.
Overall, the settlement of the first cross-border trade in e-yuan is a significant development that could have a major impact on the global financial system. It is still too early to say what the long-term impact will be, but it is clear that CBDCs are playing an increasingly important role in international trade.