An Overview of the Impact of Digital Currencies on Traditional Payment Systems
Digital currencies—which encompass privately issued stablecoins and central bank digital currencies (CBDCs) being explored by central banks around the world—are having a disruptive impact on traditional payment systems globally. These innovations not only streamline payment processes and reduce transaction costs but also demonstrate tremendous potential for promoting financial inclusion.However, their development also presents far-reaching challenges to existing monetary policies, financial stability, and regulatory frameworks.
Significant Improvements in Efficiency and Cost Reduction
One of the core advantages of digital currencies lies in their significantly enhanced payment efficiency and drastically reduced transaction costs. Traditional cross-border remittances are typically costly (for example, data from the International Monetary Fund shows that the global cost ratio for cross-border remittances averaged 6.3% in 2023) and time-consuming (2 to 5 business days).In contrast, digital currencies enable 24/7 real-time settlement, with transactions completed in a matter of seconds to minutes, and cross-border transfer costs can be reduced to less than 1%—or even just a few cents.
For example, the Multilateral Central Bank Digital Currency Bridge (mBridge) project successfully completed a pilot test based on real transactions in September 2022.During the six-week test, 20 commercial banks completed over 160 payment and foreign exchange transactions totaling more than 171 million Hong Kong dollars, fully demonstrating the immense potential of digital currencies to enhance the efficiency of cross-border payments.
Reshaping the Cross-Border Payments Landscape
Stablecoins and CBDCs are actively reshaping the global cross-border payment architecture. Institutions such as Standard Chartered Bank have joined networks that utilize stablecoins for low-cost, low-latency settlement. The Bank for International Settlements (BIS) also acknowledges the potential advantages of stablecoins in specific payment scenarios, but emphasizes that their development must be based on robust regulatory and risk control mechanisms.
Enhancing Financial Inclusion
Digital currencies provide new avenues for financial services to the world’s approximately 1.7 billion “unbanked” people (2020 data from the International Monetary Fund). Through smartphones, these individuals can conveniently use digital currencies for international money transfers and everyday payments, thereby effectively promoting the development of financial inclusion and bridging the gaps in traditional financial service coverage.
Potential Challenges to Monetary Policy and Financial Stability
The rapid development of digital currencies also presents a series of challenges. They may disrupt existing monetary policy transmission mechanisms, increase the complexity of financial regulation, and pose potential risks to financial stability. For example, if CBDCs become the primary means of payment and savings, they could lead to a reduction in the deposit base of traditional commercial banks, thereby affecting their liquidity and lending capacity.The International Monetary Fund (IMF) has expressed concern about this, particularly regarding the potential for digital currencies to trigger currency substitution or “dollarization” effects.
The Evolution of the Global Regulatory Framework
Faced with the opportunities and challenges presented by digital currencies, governments and regulatory agencies around the world are actively exploring and establishing corresponding regulatory frameworks.In the United States, former President Donald Trump signed the GENIUS Act into law in July 2025, establishing a preliminary framework for the issuance and regulation of stablecoins; the CLARITY Act was also passed by the House of Representatives, aiming to clarify the jurisdiction of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over the crypto market.
In China, the central bank’s digital yuan (e-CNY) employs a “central bank–commercial bank” two-tier operational system. As of 2024, the cumulative transaction volume in pilot programs had exceeded 10 trillion yuan, and the number of personal wallets opened had surpassed 260 million.In the initial phase, the People’s Bank of China did not pay interest on the digital yuan and utilized the two-tier architecture to maximize the use of the existing financial system while prudently addressing potential financial stability risks.
Views of Key Stakeholders
- Central Bank: Actively researching and issuing CBDCs with the aim of enhancing payment efficiency and financial inclusion, as well as supporting the implementation of monetary policy. However, it maintains a cautious stance regarding the potential financial stability risks posed by CBDCs.
- Commercial Banks: They face competitive pressure from digital currencies in cross-border payments and deposit bases. Some banks are actively developing stablecoin solutions, but it is widely believed that cross-border payments are currently the most viable application scenario.
- Third-Party Payment Providers: Digital currencies pose a competitive threat to their businesses, prompting them to accelerate digital transformation and business innovation.
- International Monetary Fund (IMF): Believes that digital currencies have the potential to significantly improve the efficiency of cross-border payments, but may impact monetary and financial stability.
- Bank for International Settlements (BIS): Points out that stablecoins offer potential advantages in certain payment scenarios, but emphasizes the need to establish robust regulatory and risk control mechanisms. It also notes that stablecoins perform poorly in “integrity” tests and are susceptible to being used for illicit activities.
- Private-sector innovators: By offering decentralized, low-cost, and highly efficient payment solutions through stablecoins and cryptocurrencies, they continue to challenge traditional payment models.
