According to a recent study by the Bank for International Settlements (BIS), 86% of central banks around the world are currently considering issuing their own central bank digital currencies (CBDCs). One of the CBDC pioneers is China. For example, the People’s Bank of China (PBoC) began looking in detail at a digital yuan, or DC/EP, back in 2014 and has been testing the CBDC system since 2020. A rollout of CBDC could potentially happen as early as the 2022 Winter Olympics. In today’s 5-Minute Friday episode, Jonas Gross provides insights into the background and goals of the DC/EP, the project status, and the implications for the European Central Bank’s (ECB) digital euro.
It is true that the Bahamas is a step ahead of the PBoC China with its CBDC launched in October 2020 – however, the Chinese project is currently most comparable to the ECB’s digital euro due to China’s macroeconomic realities and country size. Jonas advocates looking to China for inspiration from the DC/EP project.
The PBoC seems to be 4-6 years ahead of the ECB here, as the system has already been implemented and is now being tested. This is another reason why we should learn from the project – even if by no means all aspects of the project are applicable to the digital euro.