Five Chinese state-owned banks have participated in a central bank digital currency trial focused on cross-border transactions, the Bank for International Settlements (BIS) said.
The trial is part of a flurry of moves by banking officials in Beijing in recent years by Beijing to internationalise the country’s digital yuan.
More than 160 cross-border payments and foreign exchange transactions totalling more than $22 million were made during the first trial involving four central bank currencies and real-value transactions, the BIS said in a statement.
The development comes as the US dollar is surging against other currencies and triggering capital outflows out of emerging markets, threatening their economic health.
The multiple Central Bank Digital Currency (mCBDC) Bridge test developed by the BIS included China, Hong Kong, Thailand and the United Arab Emirates and was designed to deliver real-time, cheaper and safer cross-border payments and settlements, the BIS said.
Ahead of the US
Bank of Communications said it and four other Chinese banks had completed the mCBDC Bridge test to settle payments for corporate customers.
China has been testing its digital currency in major cities, mainly for domestic retail payments, though the central bank has also vowed to explore cross-border payments in digital yuan.
The world’s second-largest economy has said it is willing to discuss setting global standards for digital fiat currency as the international monetary system develops.
China is some way ahead of the United States in regard to use of a digital currency. But the Biden administration has stepped up work recently, with the US Treasury publishing three reports this month and recommending proceeding with a US CBDC – a digital dollar – if deemed to be in the national interest, as many anticipate.
Meanwhile, Russia, which has been sanctioned by the West over its war in Ukraine, has also announced plans to use its own digital currency to trade with China.
- Reuters with additional editing by Jim Pollard