Firms can prepare by having digital wallets in place and planning interoperability for cross-border trade, write Jemma Xu and Dan Prud’homme.
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 been receiving 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), the country’s central bank — has taken the clear lead in this space.
