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Track & Trace: China’s Central Bank Digital Currency
Last modified: 2020-10-04
Abstract
Following the 2009 introduction and increasing popularity of Bitcoin, there has been a renewed interest in digitizing national currency systems, especially using the blockchain technology underlying the Bitcoin system. While there are efforts underway worldwide, one that is furthest along in its implementation is that of China, where a version of the digital yuan is being tested in areas covering a population of some hundreds of millions. The benefits of an entirely digital currency, in the form of convenience for the end user, as well as ease of management of the system by the central bank could be significant. However, there is also potential cause for concern in the form of excessive surveillance and government control of financial transactions. In this paper we explore the implications, costs, and benefits of a central bank digital currency, as well as the potential applications of blockchain technology in this area.
Keywords
digital currency, cryptocurrency, central bank