The Chapman Law Review is proud to have published Professor Lan Cao’s article: Dollar Trap and Digital Currency!

Forthcoming: Dollar Trap and Digital Currency

By Lan Cao*

Abstract 

The dollar’s status as the world’s reserve currency, cemented after World War II, has been called into question over the years. American stewardship of the dollar, as both a currency of the United States and an international reserve currency, has been a source of global resentment, from allies as well as rivals. Fractures within the international monetary system, many of which arise intrinsically from the dollar’s unique status, have been compounded by the manner the United States has used the dollar: one, to solve financial disturbances such as those emerging from the 2008 housing crisis, and two, to punish certain countries like Iran and Russia by cutting them off from access to dollars and access to the dollar-based international financial system. This Article examines how, against this backdrop, China’s establishment of a central bank digital bank currency, the digital yuan, is designed to serve both the Chinese government’s aim to consolidate Party control domestically as well as to engage in dedollarization or yuan internationalization, as a way to bypass American weaponization of the dollar.

* Betty Hutton Williams Professor of International Economic Law. The author thanks editors of the Chapman Law Review for putting together an excellent symposium and for their help in editing this article. Research for the article was supported by a summer research stipend from Chapman University Fowler School of Law.