A look at DC/EP, China's new sovereign digital currency, and the policy drivers behind it, its architecture, and its expected impact on global finance
ASPI : Tweets: @he_shumei , @gerryshih , @aitkenadvisors , @aspi_org , @marcruby , and @aspi_org Tweets: Samantha Hoffman / @he_shumei : Just released: A new @ASPI_ICPC report 'The flipside of China's central bank digital currency' with chapters authored by @jgarnaut, @KaylaIzenman, Dr Matthew Johnson, @AlexandraPasc_, @fryan, @elisethoma5 and myself. Download here: https://www.aspi.org.au/... Gerry Shih / @gerryshih : The enormous implications behind China's major digital currency/payment push ( which is not same as crypto) to get around US-dominated system @He_Shumei @jgarnaut Matthew Johnson @KaylaIzenman et al https://www.aspi.org.au/... @aitkenadvisors : This should be downloaded, read, and studied. Enormous ramifications. To list just a few: over time they (CPC) can force western firms to take it, and there's nothing western firms can do about it; impact on Alipay & WeChat; future of SWIFT. https://twitter.com/... Aspi / @aspi_org : 'In the long term...a successful DC/EP could greatly expand the party-state's ability to monitor and shape economic behaviour well beyond the borders of the [PRC]' | This article mentions ASPI's report on China's central bank digital currency Read report➡️ https://www.aspi.org.au/... https://twitter.com/... Marc Rubinstein / @marcruby : “China's central bank digital currency...has the potential to create the world's largest centralised repository of financial transactions data and...would also create unprecedented opportunities for surveillance.” h/t @AitkenAdvisors https://www.aspi.org.au/... Aspi / @aspi_org : 'DC/EP is progressing rapidly and, if successful, would have major international implications that haven't yet been widely considered by policymakers' writes @He_Shumei https://www.aspistrategist.org.au/ ...
Context & Ripple Effects
ASPI's 'The flipside of China's central bank digital currency' report lands mid-2020, months after Beijing's parallel push to reshape internet standards through the New IP proposal championed by Huawei's R&D arm — together they sketch a strategy of building state-controlled alternatives to Western-run infrastructure. The report argues DC/EP is not a crypto project but a policy instrument aimed squarely at the US-dominated payments system.
The subsequent coverage validates both halves of that framing: by early 2021 the e-CNY was in pilot tests across Shenzhen, Shanghai, and Beijing, with no major country further along, while critics flagged the flip side — a centralized transaction repository usable for party-state surveillance.
First-order effects
- Alipay and WeChat Pay, which already dominate Chinese mobile payments, now face a state-issued rival whose adoption Beijing actively encourages — and the relationships note western firms could be pressured to accept it.
- Chinese citizens gain a payment rail whose every transaction flows into a single centralized repository under party-state control, per the report's architecture analysis.
Second-order effects
- A working sovereign digital currency gives China a template to export alongside its Digital Silk Road fintech investments in Africa, extending an alternative to SWIFT-based settlement beyond its borders.
- Citizen reluctance — some prefer Alipay and WeChat Pay over the e-CNY — forces Beijing to lean on the incumbent platforms rather than displace them, making the duopoly a distribution channel for state currency.
Third-order effects
- If the pattern holds, CBDCs split along governance lines: China's model treats programmable money as a surveillance and control surface, pressuring other central banks to define their own red lines — visible in the ECB facing consumer and political skepticism as it prepares its own digital euro pilot.
- The longer-term structural risk the report identifies is fragmentation of global finance into competing settlement blocs, with the US-dominated system challenged not by crypto but by state-built rails.
The trend: Sovereign digital currencies are becoming instruments of monetary statecraft, with China's DC/EP setting the pace that forces other central banks — and the SWIFT-centered system — to respond.