The development fit index of digital currency electronic payment between China and the one belt one road countries

Abstract

Central bank digital currency is one of the most important financial innovations in the global economy. However, the understanding of its cross-border application is insufficient. This study analyses the driving and supporting factors that affect the application of China’s digital currency electronic payment system in One Belt One Road countries. Using country-level data for 2019, this study proposes a systematic development fit index, consisting of six first-level indicators and 41 proxy variables. The index value shows that fit is determined by bilateral investment, bilateral trade, level of financial development, geopolitics, economic foundation and infrastructure development. Among the sample One Belt One Road countries (average index value 56.39), Malaysia (83.98), Singapore (80.5), Thailand (78.76), Russia (76.25) and the United Arab Emirates (75.48) have the most potential to participate in the new monetary system launched by China. The results provide practical implications for Chinese and OBOR governments in making related strategies.