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In the burgeoning digital economy, the explosion of interest in digital currencies, sparked by blockchain technology, has captivated stakeholders across the spectrum. At the forefront, China's central bank's digital yuan is rapidly advancing, setting it apart from private digital currencies with its legal status, anonymity, and convenience, thus heralding significant shifts in market transactions and necessitating enhancements in the national financial infrastructure. This paper, through a comprehensive review of literature and current trends, delves into the digital yuan's theoretical foundations, its application, impacts, and the risks it poses. Findings suggest that the digital yuan, leveraging its unique features, has made inroads in consumer services, aiding the broader acceptance of digital payments in China. Yet, its integration into supply chains and retail sectors lags, trailing behind third-party payment systems in adoption and development. Amidst efforts to refine policy regulation, bolster financial oversight, and encourage innovation, the digital yuan also introduces financial and cybersecurity challenges. This analysis aims to map out the digital yuan's trajectory under blockchain's umbrella, offering policy insights to underpin further research.
Yan et al. (Mon,) studied this question.