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

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  • Ahmet Faruk Aysan

    (HBKU - Hamad Bin Khalifa University [Doha, Qatar])

  • Nawaz Farrukh

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.

Suggested Citation

  • Ahmet Faruk Aysan & Nawaz Farrukh, 2021. "China's Transition to a Digital Currency: Does It Threaten Dollarization?," Working Papers hal-03364939, HAL.
    • Handle: RePEc:hal:wpaper:hal-03364939
    Note: View the original document on HAL open archive server: https://hal.science/hal-03364939
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    More about this item

    Keywords

    China; cryptocurrency; digital yuan; People's Bank of China; US. JEL Classifications: E42; E58; G28;
    All these keywords.

    JEL classification:

    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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