1Yefremov, D
1PhD, Chief Analyst Centre for International Studies, Hennadii Udovenko Diplomatic Academy of Ukraine at the Ministry of Foreign Affairs2, Velyka Zhytomyrska str., 01001, Kyiv, Ukraine dm.p.yefremov@gmail.com
Kitaêznavčì doslìdžennâ 2021, 1:165-172
https://doi.org/10.51198/chinesest2021.01.165
Section: Political, Social and Economic Development of China
Language: English
Abstract: 

Digital currencies issued by the central banks are a new phenomenon that the global financial system will face in the near future. They differ from electronic money, cryptocurrencies based on blockchain, and private digital currencies, which will be issued by fintech corporations. The disadvantages of these types of future currency are uncontrolled issuance, limited liquidity, insufficient divisibility, dependence on the motives of issuers and energy consumption. The launch of digital currencies by central banks must overcome the described limitations, be centralized and guaranteed by the authorities. The digital currency created by the People’s Bank of China will have its own characteristics: programmability, traceability, alternative registration technology. It is based on innovative software developments of the Chinese central bank, borrowed experience of Chinese fintech corporations. Special centers for registration, recording and big-data analysis will help ensure the stability of the digital renminbi. Its launch aims to substitute the US dollar in world transactions, for which China is developing a special financial infrastructure around the world. The digital yuan distribution algorithm among users still maintains a conservative approach that includes both the central bank and commercial institutions. For users, the digital yuan offers such benefits as inclusiveness, offline service, transaction customization. The latter will be carried out by private companies by preserving some of the elements built in blockchain technology. Among the shortcomings of the China’s model for launching of its digital currency are artificially limited privacy and cross-border operability. After overcoming its own limitations, the digital yuan will be able to restructure the system of global financial relations through the introduction of national Chinese standards in the world practice of monetary settlements.

Keywords: CBDC, Central Bank Digital Currency, DCEP, Digital Currency Electronic Payment, digital renminbi, digital yuan, People’s Bank of China

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