China’s Digital Currency Revolution and Implications for International Business Strategy

Abstract

As if Covid-19 and the trade war hasn’t done enough to upend global business between the US and China, yet another major transformation is afoot: the launch of China’s sovereign (i.e., central-bank offered) digital currency (CBDC). By “digital currencies” we mean financial transactions that are recorded on blockchain ledger and held in digital wallets. While Facebook’s Libra and other digital currency firms have received increasing attention, private firms are in fact unlikely to truly dominate the digital currency trade. Instead, sovereign digital currency – namely, the “Digital Currency Electronic Payments” (DCEP) system – managed by the People’s Bank of China (PBoC), China’s central bank, has taken the clear lead in this space. In this article, we briefly discuss why and how China’s DCEP is leading the digital currency revolution and what this means for international business.