Central bank digital currencies - Lessons from China

This paper critically reviews the lessons learnt from the testing of China’s digital currency, the e-CNY. Using a theory-based case study, it looks at the e-CNY testing through the lens of the academic literature on Central Bank Digital Currencies (CBDCs). The con-trolled field experiments by the Peoples Bank of China tested the technology, consumer usage and transaction robustness of the e-CNY. The results of this testing are collated, and the paper compares the transactions per second with other digital money offerings. It also investigates the results in the context of privacy and monetary policy. It is observed that several lessons can be learnt. These are that (1) CBDC testing needs to be phased and in-corporate techniques, approaches, tools, and frameworks; (2) retail CBDCs compete with private forms of digital money for share of wallet; (3) the hybrid co-development model allows for a robust CBDC offering; and (4) privacy concerns and digital literacy impact user uptake. It is concluded that there is a role for retail CBDCs and that those central banks that are exploring the possibility should develop a testing regime.