The People’s Republic of China (PRC) has abandoned its traditional foreign policy restraint and is playing an active role in shaping the global order of the 21st century. This FES-analysis shines a spotlight on these changes, concentrating explicitly on China's willingness to become the first major economy to launch an official central bank digital currency (CBDC). The Chinese government is keen to use new digital and disruptive technologies in its quest for a more powerful position at all levels of the global political system. The PRC has continuously invested in digital currencies and crypto-based payment systems in recent years. The opportunity to play a leading role in shaping the new field of CBDCs are all in line with Beijing’s general geopolitical approach to increasing its degree of independence from the West. This analysis by Nadim Baker and Felix Klein picks up on these ambitions and outlines the opportunities and risks posed by digital currencies in the context of China’s objectives and their

implications for Europe and, ultimately, the European Central Bank (ECB). The authors explain how the emergence of decentralised cryptocurrencies is revolutionising and challenging traditional finance. Central banks face the challenge of responding to this development and providing a regulated approach to the new global digital economy. Based on their analysis, Baker and Klein recommend that the development of digital central bank currencies, such as the e-yuan in China, be met with a more sustained European response to help shape the emerging standards for the digital economy in a European way.