China's Transition to a Digital Currency: Does It Threaten Dollarization?

Ahmet Aysan and Nawaz Farrukh

Working Papers from HAL

Abstract: This article provides a detailed introduction to China's launching of a digital currency. We conduct a comparative analysis concerning whether digital currency is a more stable and reliable currency than cryptocurrency and investigate whether a digital renminbi (or yuan) could replace the US dollar as a medium of exchange in international transactions. China has gained a first-mover advantage by rolling out a central bank digital currency (CBDC). But the outcome will depend on the US response as well as the future evolution of the US and Chinese economies. Most other articles on this topic focus on domestic use of the Chinese CBDC. But this study is unique in analyzing the prospects of a digital renminbi as a replacement for the US dollar in international commerce.

Keywords: China; cryptocurrency; digital yuan; People's Bank of China; US. JEL Classifications: E42; E58; G28 (search for similar items in EconPapers)
Date: 2021-10-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-isf, nep-mac, nep-mon and nep-pay
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Working Paper: China’s Transition to a Digital Currency: Does It Threaten Dollarization? (2021)
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