A Digital Currency Review: Private DC, CBDC and E-CNY

Bitcoin,created in 2009, symbolized a brand new stage of digital currency (“DC”).In general,digital currency can be classified as private DC and CBDC(central bank DC):the former has the two main categories of Bitcoin-like cryptocurrency and USDT-like stablecoins while the latter has a retail type and a wholesale type.Overall,the practice of digital currency is still in its early stages,and academic research has not been going on for long.The mechanisms and rules of different digital currencies vary greatly,and scholars' perspectives and methods differ,with disagreements and controversies on many issues.Therefore,it is necessary to systematically review and comment on the literature.Moreover,literature on digital currencies has grown rapidly in recent years,particularly those related to stablecoins and CBDC.This article attempts to review the representative literature of DC and important policy discussions regarding CBDC.The ultimate goal is to point out future research directions of CBDC,particularly for China's CBDC (e-CNY),and to stimulate further thoughts on China's digital currency policy practice. Such work should be highly meaningful,as China's central bank's policies on digital currency are quite advanced globally,such as banning private digital currency transactions and developing CBDC early on,but the domestic academic community has not provided so much serious and in-depth academic research in this area,and there is not enough support for policy practice.As digital currency development is surging globally,China's central bank is at the forefront,and the academic community should catch up. In the main body,this paper aims to comprehensively review the international frontier literature and policy reports on digital currency since 2009,based on the two main threads:private DC and CBDC.Specifically,in the field of private DC,it focuses on international literature related to private digital currency and blockchain technology,covering four themes:the operation mechanism of cryptocurrency,competition among various digital currencies,cryptocurrency transactions and industrial organization,and the rise of stablecoins and their impact.In the field of CBDC,it mainly reviews international literature on CBDC,covering five major themes:whether to issue CBDC,its impacts on financial intermediaries,firm investment and welfare,CBDC and privacy,CBDC and financial stability,and policy discussions on CBDC.Furthermore,given the intensive pilots of China's CBDC since 2019,this paper particularly uses one section to discuss policy issues of e-CNY,e.g.,if e-CNY should stick to the current status/definition as being M0 and retail CBDC.In the end,it points out the future research direction of CBDC,particularly of e-CNY,including optimal design from consumers' perspective,analysis regarding e-CNY used for cross-border transactions,impacts of the two-tier system on the payment industry and data market,impacts on monetary policy and financial stability,and other dimensions of future pilots and explorations,etc.