The debate over Central Bank Digital Currencies, or CBDC, has become more prominent among policy makers and in the media since the publication of the Hinrich Foundation’s primer report on the subject. According to the Bank of International Settlement (BIS), more than 80% of central banks around the world are now studying the feasibility of this new form of digital central bank money.
Developments in China are gaining particular attention. China’s CBDC, known as Electronic Payment / Digital Currency (EPDC), has undergone significant trials. Local governments in Chengdu, Shenzhen, and Suzhou have issued millions of dollars’ worth of the digital currency through a lottery. E-commerce giant JD.com also participated in the trial by allowing some purchases to be paid with the digital yuan. The trial has added private bank Zhejiang E-Commerce Bank in Zhejiang province to its roster of seven banks to test the digital yuan.
For cross-border transactions, the People’s Bank of China (PBoC) has combined with the Hong Kong Monetary Authority, the central bank of the United Arab Emirates, and the Bank of Thailand to explore the potential for making CBDC inter- operable between platforms. The goal: to facilitate cross-border payments using multiple digital currencies.1
These recent developments prompt the question: Will central bank digital currencies help to advance or hinder future global trade?Stewart Paterson CBDC global trading system
To read the full report from the Hinrich Foundation, please click here.