Currency digitalization: The supply, demand, and infrastructure aspects of china's central bank digital currency
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Date
2025-11
Open Access Location
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier B.V.
Rights
(c) 2025 The Author/s
CC BY 4.0
CC BY 4.0
Abstract
This paper studies how digitalization affects the adoption of China's central bank digital currency (e-CNY). Utilizing provincial-level panel data from 2011 to 2021, we examine the impacts of "Breadth of Digitalization Coverage" and "Digitalization Level" on the supply and demand dynamics of e-CNY. Our findings show that digitalization reduces both the supply and demand of physical currency. This decreasing reliance on physical currency implies that digitalization has paved the way for adopting e-CNY. We further investigate the infrastructural factors that support digitalization progression and e-CNY's implementation. Our results suggest that the transition from physical to digital currency is jointly driven by wallet digitalization (enabled by smartphones) and payment scenario digitalization (supported by e-commerce). Our result findings provide implications to both China and other countries developing CBDC initiatives.
Description
Keywords
Central bank digital currency, e-CNY, Currency digitalization, Digital wallets, Digital payment scenarios, Cash substitution
Citation
Zeng L, Young MR, Hao W. (2025). Currency digitalization: The supply, demand, and infrastructure aspects of china's central bank digital currency. Finance Research Letters. 85. Part B.