Central bank digital currency, financial technology level and regional financial stability

This study delves into the relationship between the issuance of central bank digital currencies (CBDCs) and regional financial stability. Through empirical analysis, we find that the pilot policy of digital yuan has a significant positive impact on financial stability. Further analysis of regional heterogeneity reveals that cities in central and western China, which have a weaker financial foundation, experience more pronounced improvements in financial stability under the digital yuan pilot compared to eastern regions. Additionally, the level of financial technology plays a crucial moderating role in enhancing the effects of the digital yuan pilot policy, particularly in central and western regions. These findings provide valuable insights for policymakers, aiding in the more precise and efficient promotion of digital currency pilots and related financial technology development.