China’s digital yuan has achieved yet another milestone by reaching Taiwan. Xiamen Xiangyu Group (XMXYG), a Taiwanese firm successfully issued the China’s first cross-strait integrated digital yuan bond.
They raised a massive amount of $68 million in an ultra-short-term period. This step is bold and marks a remarkable achievement in digital yuan’s influence beyond mainland China.
What will be the funds be used for?
The funds raised during the bond issuance were collected directly into the issuer’s digital yuan wallet. This feature is notable since it is clear that China wants to integrate its central bank digital currency (CBDC) into its financial world.
A portion of these funds were used by XMXYG’s Taiwan branch to demonstrate some practical applications of the digital yuan.
This bond is the country’s first cross-strait integrated digital [yuan] bond, with the largest issuance scale to date of around $68 millionA local media house.
The geopolitical aspect of this bond
A majority state-owned bank based in Fujian Province, the Industrial Bank, underwrote the issuance of this bond. This province holds particular significance as it is the closest mainland Chinese region to Taiwan and is separated from the island by the Taiwan Strait.
The trade and exchange activities between these regions are collectively known as “cross-strait” relations. The Chinese government expects that this bond issuance will foster further cooperation.
China’s previous Digital Yuan endeavours
Traditionally, the digital yuan’s cross-border experiments were limited to regions like Hong Kong and Macau. However, East Asian locations are now being favoured by Chinese banks and trading firms.
This includes exploring the adoption of the its Digital Yuan for its Belt and Road Initiative (BRI). It will enable China to seal digital yuan-fueled deals and help form strategic alliances.
More companies in China embracing the Digital Yuan to access funding for environmentally friendly projects. An electronics firm in Guangdong Province, Zhongshan Jewelly Optoelectronics Technology was the first in the province to secure a digital yuan-powered “green finance” loan.
The Guangzhou Branch of the People’s Bank of China issued a loan of $276,000 directly to the company’s corporate digital yuan wallet.
It is clear that the digital currency is set to revolutionize China’s prevailing dominance as the digital yuan makes remarkable strides in cross-border adoption and banking. As more nations and businesses recognize the potential of CBDCS, further groundbreaking developments in finance can be expected.