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

38 Pages Posted: 30 Jan 2022 Last revised: 31 Mar 2022

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Xian Gu

Durham University Business School

Julapa Jagtiani

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2022

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.

Keywords: Fintech, Cryptocurrency Regulations, Stablecoins, CBDCs, e-CNY, China

JEL Classification: G21, G28, G18, L21

Suggested Citation

Allen, Franklin and Gu, Xian and Jagtiani, Julapa A., Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China (January 30, 2022). Journal of International Money and Finance (2022), Available at SSRN: https://ssrn.com/abstract=4021436 or http://dx.doi.org/10.2139/ssrn.4021436

Franklin Allen (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Xian Gu

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Julapa A. Jagtiani

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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