"Best of all, Malaysia should follow in China's footsteps who are quick to act."
This has never happened before, but this time the Shanghai Petroleum and Natural Gas Exchange (SHPGX) announced that digital yuan has been used to settle oil transactions where PetroChina International bought 1 million barrels of oil on October 19, 2023.
The transaction is a response to the call of the Shanghai Municipal Party Committee and the Municipal Government to use China's central bank digital currency (CBDC) or better known as e-CNY for international trade.
Although the seller and the price in the transaction were not disclosed at all, the oil price of the "OPEC basket" of 13 producing countries was $95.72 per barrel on October 19, 2023.
Please be informed that the crude oil agreement is one of the main steps to increase the use of the yuan in the international market including the global movement towards de-dollarization which means the process of reducing the use of the United States (US) dollar as a global currency.
In the first three quarters of 2023, the use of yuan in cross-border settlements, which increased by about 35% year-on-year, reached $1.39 trillion.
The digital yuan was first used for the purchase of natural gas (LNG) at SHPGX in March 2023 when French TotalEnergies agreed to sell LNG to China National Offshore Oil Corporation (CNOOC), then the second LNG deal last week was between CNOOC and French Engie.
On 19 October 2023, First Abu Dhabi Bank signed an agreement regarding CBDC with Bank of China following China and the United Arab Emirates (UAE) are participants in the mBridge platform that supports cross-border transactions with CBDC.
