PetroChina successfully bought a million barrels of crude oil using the digital renminbi or e-CNY at the Shanghai Petroleum and Natural Gas Exchange (SHPGX) last Thursday.
The deal marked the first-ever crude oil transaction settled with this digital currency. This achievement underscores the ongoing efforts to internationalize the Chinese currency. The exact value of this transaction and the seller's identity remained undisclosed in the Friday announcement by SHPGX.
This transaction was part of SHPGX's effort to comply with the Shanghai municipal government's directive to use e-CNY in cross-border trade.
SHPGX aims to offer faster, more stable and efficient trading and payment methods for global market participants, helping them meet their diverse needs. This move will also make it easier for international capital to access the Chinese market.
CITIC Securities chief economist Ming Ming said using e-CNY is a crucial step in promoting cross-border settlements and the internationalization of the Chinese currency.
RMB gains traction in global payments, oil settlements
This e-CNY oil settlement happened two days after China National Offshore Oil Corp (CNOOC) and France's Engie settled a deal for liquefied natural gas (LNG) using the yuan at SHPGX on Tuesday.
Engie is set to supply 65,000 metric tons of LNG to CNOOC in November as part of this agreement. This follows a similar deal between CNOOC and France's TotalEnergies in March.
In September, the Chinese currency remained the fifth most widely used currency for global payments by value. It had a record market share of 3.71 percent, as reported by the Society for Worldwide Interbank Financial Telecommunication.
During the same period, RMB payments increased by 2.77 percent compared to August, while payments in other major currencies decreased by 3.96 percent.
Regarding global payments outside the eurozone, the RMB rose to sixth place in September, with a 2.73 percent share. This was an increase from 2.59 percent in August.
Data from the People's Bank of China, the country's central bank, showed that cross-border RMB settlements under the current account totaled 10.16 trillion yuan ($1.39 trillion) in the first three quarters, marking a 35 percent year-on-year increase.
Despite fluctuations in currency values throughout the year, the ongoing internationalization of the RMB showcases the increasing acknowledgment of the Chinese currency among global businesses, according to Wang Youxin, a senior researcher at the Bank of China.
Wang further attributes this advancement to supportive policies for cross-border RMB settlements and the stability of China's monetary policies. There is also an expanding adoption of the yuan in emerging economies.
Government calls for global RMB use
In January, the Ministry of Commerce and the People's Bank of China issued guidelines to encourage the use of cross-border RMB in trade and investment.
These guidelines called for various efforts to streamline RMB pricing and settlement across different types of cross-border transactions. Authorities urge banks to enhance the convenience and efficiency of their settlement services.
Banks were also encouraged to expand their offerings of overseas RMB-denominated loans and to innovate new products and services actively. The circular also stressed the need to enhance support in areas like business matchmaking, financial planning and risk management.
In June, the Central Bank of Argentina announced its decision to permit RMB deposits and withdrawals within the Argentine banking system. In late March, the Central Bank of Brazil also revealed that the yuan had surpassed the euro to become the country's second-largest international reserve currency.