China, the United States, and central bank digital currencies: how important is it to be first?

In only a few years, central bank digital currencies (CBDC) have gone from a fringe idea promoted by cryptocurrency bloggers to an idea being seriously explored by 80% of the world’s major central banks, including the People’s Bank of China and the United States Federal Reserve. This paper gives an overview of the drive at the world’s central banks to evaluate CBDCs and examines the reasons behind the world’s two leading economies’ stark divergence in central bank digital currency development. China committed much earlier to launching a CBDC, doing so in early 2016, and has since taken more concrete steps towards piloting and issuing a CBDC than the Fed, which has yet to commit to ever issuing one.