Katherine Ross

In a first for both PetroChina and the digital yuan, the Chinese oil and gas company reportedly settled a trade with the country’s central bank digital currency (CBDC).&nbsp;



The news was first reported by China Daily, a paper owned by the Chinese Communist Party.



PetroChina allegedly bought a million barrels of crude at the Shanghai Petroleum and Natural Gas Exchange (SHPGX), with the transaction settled by e-CNY.&nbsp;



The <a href="https://www.shpgx.com/html/zxdt/20231020/5555.html">announcement</a> from Friday, made by the SHPGX, did not disclose either the seller or the deal’s value.



“The Shanghai Municipal Party Committee and Municipal Government issued work requirements…The Shanghai Oil and Gas Trading Center responded to the call and actively promoted the embedding of digital renminbi in cross-border renminbi payments when expanding international oil and gas trade transactions,” a translated version of the announcement said.&nbsp;



The digital yuan was first created in 2021, <a href="https://blockworks.co/news/analysis-what-exactly-is-chinas-cbdc">seven years after the People’s Bank of China first started working on the project</a> back in 2014. In April, <a href="https://blockworks.co/news/china-cbdc-government-salaries">reports claimed that Changshu</a> — a city in the Jiangsu province of East China — paid civil servants and government employees in the <a href="https://blockworks.co/tag/cbdc">CBDC</a>.



The communist country has been working to incorporate the CBDC and create use cases for it. At the start of this year, the <a href="https://blockworks.co/news/china-cbdc-monetary-supply">People’s Bank of China first included the CBDC</a> in its official cash reports.&nbsp;



While China is one of the few countries to have a rolled-out CBDC, a Bank of International Settlements survey found that <a href="https://blockworks.co/news/banks-exploring-potential-cbdc">roughly 93% of central banks admitted</a> that they’re interested in exploring “some form” of a CBDC.



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CBDC

Digital yuan used to settle crude oil trade for Chinese oil company: Report

The European Union is heading into the “preparation phase” of its digital euro project.



According to the Governing Council of the European Central Bank, the next phase will start on Nov. 1 and will last two years. The ECB first launched an investigation into the digital euro back in 2021.



“It will involve finalizing the digital euro rulebook and selecting providers that could develop a digital euro platform and infrastructure. It will also include testing and experimentation to develop a digital euro that meets both the Eurosystem’s requirements and user needs, for example in terms of user experience, privacy, financial inclusion and environmental footprint,” the ECB <a href="https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr231018~111a014ae7.en.html">wrote</a>.



Digital privacy is a priority for the digital euro, with the Eurosystem hiding personal data and aiming to “achieve a cash-like level of privacy for offline payments.”



Read more: <a href="https://blockworks.co/news/eu-digital-euro-uses-utxo">European Union&#8217;s digital euro may run on UTXO</a>



The Eurosystem will also <a href="https://www.ecb.europa.eu/paym/digital_euro/investigation/profuse/shared/files/dedocs/ecb.dedocs231018.en.pdf">plan</a> to maintain the ledger or “root of title” of the money being issued as well as the settlement of transactions of the digital euro. The Eurosystem, therefore, would “take responsibility for recoding digital euro liabilities in its own books.”



“We envisage a digital euro as a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards. It would coexist alongside physical cash, which will always be available, leaving no one behind,” ECB President Christine Lagarde said.&nbsp;



Read more: <a href="https://blockworks.co/news/european-central-bank-launches-24-month-investigation-into-digital-euro">European Central Bank launches 24-month investigation into digital euro</a>



In the previous — or current until November — phase, the ECB ran tests and “concluded that it is possible to smoothly integrate a digital euro into the existing payment landscape, while still leaving scope for the market to use innovative features and technologies when distributing a digital euro.”



While the project moves into its next phase, the ECB noted that it is “closely” following legislation and a decision on a digital euro will be considered “only after the legislative act is adopted.”



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digital currencies

The EU’s digital euro is inching closer to the ‘preparation phase’

Ben Strack

<div id="highlights-block_61df5d611220b" class="highlights">
 <ul>
 <li>Visa’s module is designed to allow central bank digital currency networks to connect to traditional financial service providers</li>
 <li>Federal Reserve Chairman Jerome Powell said Tuesday that the agency’s report on digital currencies is expected in the coming weeks </li>
 </ul>
 
</div>



Visa has announced a partnership with blockchain technology company ConsenSys to develop a module designed to help central banks and financial institutions build user-friendly services on top of central bank digital currency (CBDC) networks.&nbsp;



The alliance bridges new CBDC frameworks with the existing financial ecosystem to create a roadmap for adoption and allow consumers to spend CBDCs at any merchant that accepts Visa, according to the company.



<h3 class="wp-block-heading">A topical subject</h3>



CBDCs differ from decentralized currencies like bitcoin, as they are issued and backed by a government and transact on a centralized permissioned blockchain.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’ve spoken with nearly 30 central banks to understand their perspectives on CBDCs and to identify the ways in which our network, infrastructure and value-added services can support them,” a Visa spokesperson told Blockworks.</blockquote>



Federal Reserve Chairman Jerome Powell <a href="https://cms.blockworks.co/fed-chair-powell-cbdc-and-stablecoins-can-coexist/" target="_blank" rel="noreferrer noopener">said during his confirmation hearing</a> in front of the Senate Banking Committee Tuesday that a report on digital currencies can be expected in the coming weeks. Powell added during the hearing that he believes CBDCs and privately issued stablecoins can co-exist. 



US Rep. Tom Emmer (R-Minn.) <a href="https://cms.blockworks.co/us-rep-tom-emmer-proposes-bill-to-shape-cbdc-plans/" target="_blank" rel="noreferrer noopener">proposed a bill</a> on Wednesday that would prevent the Fed from issuing a CBDC directly to individuals, noting in a statement that the US government should not compete with the private sector in this space.



The Visa representative said the company is not in a position to predict if and when the Federal Reserve or other central banks could launch CBDCs.



“If successful, CBDC could expand access to financial services and make government disbursements more efficient, targeted, and secure,” Catherine Gu, Visa’s head of CBDC, said in a blog post published Thursday. “That’s an attractive proposition for policy makers.”



Use cases for such a digital currency include sending stimulus payments quickly to a targeted set of users with specific spending parameters, Gu added.&nbsp;



But central banks and traditional financial players will have to work together in order to see widespread CBDC adoption, according to Shailee Adinolfi, director of strategic sales at ConsenSys.



ConsenSys has helped build CBDC pilots for the National Australia Bank, Bank of Thailand, Societe Generale-Forge, Hong Kong Monetary Authority and other central banks, a spokesperson for the company told Blockworks.



“In our work with central banks, we’ve seen strong interest in receiving expertise and support from the private sector,” Adinolfi said in the blog post. “They are interested in piloting concrete use cases that will significantly benefit the efficiency and resources required to transfer assets and reconcile accounts.”



<h3 class="wp-block-heading">The Visa CBDC payments module</h3>



Gu noted that making sure that CBDCs can be accepted by businesses from day one by connecting to existing payment infrastructure will allow developers, fintechs and financial institutions to build on top of CBDC networks.&nbsp;



Visa’s CBDC Payments Module is designed to provide an on-ramp to existing payment networks, so that CBDC networks can easily connect to financial service providers, according to the firm. Banks will be able to plug into the module and integrate their existing infrastructure, allowing them to issue CBDC-linked payment cards, for example.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We envision a user experience that looks very familiar to how you pay today,” Gu explained. “If CBDC networks are seamlessly integrated into your existing banking app, you’d be able to use your CBDC-linked Visa card at the checkout.”</blockquote>



Visa is in the process of integrating its module with the ConsenSys Codefi CBDC sandbox, which is powered by ConsenSys Quorum, an open-source version of the Ethereum protocol that’s optimized for enterprise applications.&nbsp;



“It can enable a two-tier CBDC system for central banks to issue and distribute CBDC,” Adinolfi said. “Quorum’s robust open-source protocol layer ensures compatibility with private permissioned and Ethereum Mainnet networks as well as familiar products and tooling in the Ethereum ecosystem.”&nbsp;



ConsenSys last month announced <a href="https://cms.blockworks.co/permissioned-blockchain-offers-scalability-and-privacy/" target="_blank" rel="noreferrer noopener">its collaboration with Mastercard</a> to address the challenge of scalable applications on the Quorum tech-stack.



Visa expects to pilot the module’s use cases in the spring, Gu said, at which point the company will be ready to work with central banks, financial institutions and fintechs to integrate the module into their technology stacks.



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