The Impact of Central Bank Digital Currency Participation in Cross-Border Payments on International Monetary Competition

This paper examines the far-reaching impact of central bank digital currency (CBDC) applications for cross-border payments on the international monetary competition landscape. Against the backdrop of globalization and digitalization, CBDC has emerged as a catalyst for financial innovation, with cross-border payments being its pivotal use case. As a form of legal tender with multifunctional capabilities, CBDC enables efficient cross-border transactions through unique technological pathways. In the current diversified land*scape of international currency competition, CBDC-based cross-border payments could disrupt the U.S. dollar’s dominance. By intensifying global currency rivalry and broadening its scope, these innovations may empower emerging economies to elevate their currencies’ international standing. Using China as a case study, this paper proposes strategic recommendations, emphasizing technological advancement, international regulatory coordination, and proactive engagement in global rule making. The findings offer critical insights into the evolution of the global monetary system.