China’s central bank digital currency (CBDC) initiative is expanding its implementation to wholesale use cases. The Shanghai Clearing House will support the use of the digital yuan for commodity transactions starting today. It is the largest central counterparty (CCP) in China responsible for the clearing and payment of financial transactions.

While the use of the digital yuan is not mandatory, the digital currency settlement service will initially be free to encourage adoption.

This latest announcement is for commodities, but the Shanghai Clearing House is responsible for the clearing and settlement of many financial transactions other than stocks. That includes bonds, interest rate swaps, foreign exchange (FX), credit, and commodities. Last year, the CCP cleared 552.6 trillion RMB ($76.4 trillion) in transactions.

Growth in the use of the digital yuan has been mixed. By including high-value transaction figures, the next set of reported RMB figures should be significantly higher. There was an earlier announcement about using digital currency for securities settlement, though that was a more limited example compared to the larger central counterparty.

The government last reported statistics on the adoption of digital RMB for the period up to August 2022. While the number of personal wallets opened reached 261 million by the end of 2021, the wallet figure was not updated in 2022. And the growth was aided by many massive cash giveaways. The total value of transactions increased to RMB 100 billion ($13.9 billion) by the end of August 2022, an increase of 20% over the May 2022 figures.

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