Why China Became the First Major Country to Implement the CBDC

Abstract

It took only four years for China to transform CBDC research and development into pilot projects. Among the countries engaged in CBDC research, China may have made the fastest progress in CBDC research and development. However, the current research focuses mainly on mechanism and the design of e-cny and its geopolitical implications, and does not answer the question why the people's Bank of China became the first major country to implement CBDC. To answer these questions, this paper analyzes the institutional foundations from a macro strategic perspective that have allowed China and the PBoC to lead the world in testing CBDC. Then this paper analyzes Chinas CBDC development process with a focus on the role of Chinas financial regulatory institutions and policy innovation. It identifies the key agencies and key decision makers in the process of Chinas CDBC research and development process. It also provides a comparative analysis of Chinas institutional feature vis--vis the United States to further illustrate Chinas institutional settings for it to be the first to launch CBDC.