Shanghai Clearing House Launches Digital Yuan Clearing and Settlement Service for Bulk Commodity Buisiness

Shanghai Clearing House has announced the launch of the digital yuan clearing and settlement service for bulk commodities trading since Monday, the Global Times reported.

According to experts, the initiative will promote the use of digital yuan in the commodities market and support the wider use of digital currency in China.

Starting Monday, the clearing house's commodity spot clearing business will support clearing and settlement in digital yuan with no fees, according to a notice issued by the Shanghai Clearing House.

Dong Dengxin, president of Wuhan University of Science and Technology, said the launch of the service will make cross-border settlement of commodities safer, faster, more efficient and more cost-effective for financial institutions and service providers.

He also noted that China is the world's largest buyer of commodities, so this initiative also facilitates the internationalization of the currency and brings a trusted clearing system to the world.

The move comes amid significant progress in the development of the digital yuan and its adoption across industries.

Digital yuan is also gaining traction in Hong Kong. Cooperation with the People's Bank of China, the central bank of China, on digital yuan cross-border retail payments has entered the second phase of testing, Chan Mo-po, secretary for finance of the Hong Kong Special Administrative Region, wrote in a blog post Sunday.

The goal of the test is to use the Hong Kong real-time gross settlement payment system, the Faster Payment System, to top up digital yuan wallets so that Hong Kong residents can use the digital currency in the mainland in the future, said Howard Lee, deputy chief executive of the Hong Kong Monetary Authority.

In addition, digital yuan is becoming increasingly popular in the e-commerce sector. Chinese e-commerce giant JD.com said that during its recent 618 shopping promotion, users who use digital yuan grew 216 percent year-on-year and the number of transactions using the digital currency increased 245 percent year-on-year.

In a research report, China International Capital Corporation predicted that the digital yuan will enter a period of rapid development in the next three years and is expected to be used in more areas of the digital economy.