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ABSTRACT
From both theoretical and practical perspectives, we examine the global development and competition of digital currencies, and investigate the design of China’s central bank digital currency (CBDC). Moreover, on the basis of correcting shortcomings in the existing literature, we undertake a quantitative analysis of the economic impact of the issuance of DC/EP based on a four-sector DSGE model. The results demonstrate that the substitution effect of DC/EP on bank deposits is limited, while the unit impact can enhance the economic growth rate by 0.15% and the overall economic effect is positive, at the same time it reduces the leverage ratio to a certain degree, which is conducive to reducing systemic financial risk. Therefore, we contend that China should accelerate the research and development of DC/EP and launch pilot schemes to promote DC/EP. Moreover, China should actively participate in the drafting of international regulations for digital currencies, selectively liberalize the jurisdiction of overseas nodes, jointly establish an integrated digital infrastructure for future generations.
Disclosure statement
No potential conflict of interest was reported by the authors.
Correction Statement
This article has been republished with minor changes. These changes do not impact the academic content of the article.
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Notes on contributors
Wu Tong
Wu Tong, Deputy Director of the China E-Commerce Industrial Park Development Alliance Blockchain Committee, PhD in Finance at Central University of Finance and Economics, specializing in Fintech, blockchain economy and digital currency.
Chen Jiayou
Chen Jiayou Post-Doctorate Researcher in Applied Economics, Associate Researcher, Deputy Director of Guizhou Big Data Policy and Legislation Innovation and Research Center, specializing in the digital economy.