Challenges and Opportunities in the Application of China’s Central Bank Digital Currency to the Payment and Settle Account System

With the advancement of the Internet and big data technology, currency has gradually developed in the direction of virtualization and digitization. The governments and central banks of various countries have gradually begun to pay attention to the role of digital currencies, and central bank digital currencies have emerged as the times require. As one of the first countries to study digital currency, China will devote itself to applying central bank digital currency to actual transactions in the future. This article focuses on how China’s CBDC is used in the transaction settlement system. The opportunity is that the central bank’s digital currency technology improves the security, flexible operation and diversified application scenarios of the overall transaction settlement system, and further safeguards China’s national financial sovereignty. The challenge is that the current technology is still uncertain and different from the traditional RMB. In the future, China’s CBDC will also compete fiercely with other sovereign currencies. It is recommended to strengthen technological innovation, improve the relevant systems and regulations of the central bank’s digital currency operation, and make relevant policies to prevent the United States from imposing political and economic sanctions on China. This article will provide suggestions on the challenges that the People’s Bank of China may face in the future application of digital currency to the transaction settlement system.