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This article discusses the impact of central bank digital currency(CBDC) from the perspective of monetary and fiscal policy. We mainly discuss how retail CBDC can improve traditional policy performance. We argue that A CBDC helps existing monetary policies to break through the zero lower bound, shorten the policy time lag, realize selective policy interventions, and make possible the price level target policy system. Similarly, the combination of CBDC and smart contracts can directly affect the performance of the fiscal policy. Compared with the convenience and impact of CDBC as a medium of exchange, its impact as a policy tool is more profound. The current monetary policy is facing a zero lower bound. The fiscal policy is facing a huge sovereign debt crisis and the impact of other private digital currencies on fiat money, which makes the importance of CBDC as a new policy tool more prominent. However, the research on CBDC as a policy tool has many fundamental questions that remain to be answered. This paper contextualizes CBDC with global challenges in policies and new technology advances, and the authors rethink CBDC from a policy perspective, which may provide many new thoughts and have implications for the rise of global CBDC.

DCEP is the Chinese version of Central Bank Digital Currency (CBDC). It is the only legal digital currency in China and meets four conditions: (a) it is issued by the central bank; (b) it is digitized; (c) it is account and wallet based; (d) it is oriented towards the general public. As a retail central bank digital currency, it has three main technical features: a “tiered limit arrangement” (small-scale payments can be made anonymously while largescale payments cannot), a “two-tier operating system” (as with the central bank-commercial bank traditional model), and a “dual offline payment system” (supporting both parties of the transaction). Compared with CBDCs in other countries, China’s DCEP has smaller economic impacts, more obscure strategic goals, and more scarce technical details. But its progress in testing is ahead of central banks of other countries. This article is based on public information and is intended to explain what DCEP is and why and how it was developed. It also offers suggestions for future research.