Summary:
- China may be the first major country to launch a central bank digital currency or CBDC
- The Chinese CBDC, named DCEP, will strengthen the position of the central bank and help to further modernize the Chinese economy
- The DCEP will probably also be available for China’s trade partners, to begin with Africa
- The DCEP may strengthen the international position of the renminbi to the detriment of the euro
- The arrival of the DCEP should be a strong wake-up call for Western, especially European, policymakers
What does the PBoC want to achieve with the DCEP? The PBoC has several objectives with the introduction of the DCEP.
- Prevention of a monopoly in the payment system
- Promotion of financial inclusion and further reduction of the role played by cash
- Better information on payment flows and prevention of illegal transactions
- Restricting capital flight
- Retention of monetary sovereignty
Download and read the full report by Wim Boonstra and Rabobank here.
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