LEGAL FRAMEWORKS FOR IMPLEMENTING LEGAL DIGITAL CURRENCY: A COMPARATIVE STUDY

Abstract

The evolution of money has been marked by constant change, adapting in response to the evolving needs of society. Beginning with the use of seashells as a rudimentary form of currency, it became apparent that seashells' limited availability hindered their widespread use. Consequently, national unified systems of metal and paper money gradually emerged to facilitate economic transactions. In the present day, driven by increasing wealth and propelled by advancements in blockchain, cryptography, and related technologies, digital currency has gained prominence as a solution to transcend the constraints of physical currency. This shift has prompted various nations, including China, to delve into the realm of digital currencies, envisioning a future where legal digital currencies replace traditional cash, offering cost-saving benefits. China has been at the forefront of this movement, initiating research on legal digital currency in 2014 and establishing the Central Bank Digital Currency Research Institute in 2017. Subsequent pilot programs in regions like Xiongan, Suzhou, Chengdu, and Shenzhen paved the way for broader implementation, with additional pilot areas like Shanghai, Changsha, Hainan, Xi'an, Dalian, and Qingdao joining the effort. The People's Bank of China has also proposed revisions to the "Law of the People's Bank of China," providing a legal framework for the future adoption of legal digital currency. Moreover, international counterparts, including Russia, Sweden, and Venezuela, have embarked on their own journeys toward legal digital currencies, each driven by unique motivations and strategies to harness the potential of digital currency in modern payment systems.