Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China

Allen, Franklin; Gu, Xian; Jagtiani, Julapa

Abstract

Fintech and decentralized finance have penetrated all areas of the financial system and have improved financial inclusion in the last decade. In this paper, we review the recent literature on fintech, cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). There are important implications from the rise of fintech and the introduction of stablecoins and CBDC in recent years. We provide an overview of China’s experience in fintech, focusing on payments, digital banking, fintech lending, and the recent progress on its CBDC pilots (e-CNY). We also discuss important considerations in designing effective cryptocurrency regulations. Cryptocurrency regulations could promote growth of innovations through enhanced public confidence in this market. The e-CNY could become mainstream in the global market through effective regulations which provide incentives and protection to market participants. A key factor to success for digital currencies has been their widespread adoption. If the Chinese e-CNY were to become a mainstream currency, the introduction of CBDC could potentially offer solutions to existing problems inherent in the traditional financial systems.

Citation

Allen, F., Gu, X., & Jagtiani, J. (2022). Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China. Journal of International Money and Finance, 124, Article 102625. https://doi.org/10.1016/j.jimonfin.2022.102625

• Journal Article Type: Article
• Online Publication Date: Feb 22, 2022
• Publication Date: 2022-06
• Deposit Date: Oct 10, 2022
• Publicly Available Date: Aug 23, 2023
• Journal: Journal of International Money and Finance
• Print ISSN: 0261-5606
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 124
• Article Number: 102625
• DOI: https://doi.org/10.1016/j.jimonfin.2022.102625
• Public URL: https://durham-repository.worktribe.com/output/1192204