The Role of Digital Currency in International Trade

Opportunities and Challenges

Abstract

This study examines the transformative role of digital currency in international trade, focusing on the dual perspectives of opportunities and challenges. Through a mixed-methods research design, incorporating surveys, interviews, case studies, and secondary data analysis, we delve into the potential of digital currencies to enhance transaction efficiency, reduce costs, and promote financial inclusion in global commerce. Our findings reveal a significant positive impact on transaction speed and cost reduction, underscoring digital currencies' capacity to streamline international trade processes. Moreover, an increase in trade volume was observed, suggesting that digital currencies may lower entry barriers for smaller enterprises, thereby fostering a more inclusive trade environment. However, the study also identifies substantial hurdles to the widespread adoption of digital currencies in international trade, with regulatory uncertainty and security concerns being the most prominent. Approximately 55% of respondents highlighted the absence of a harmonized regulatory framework as a significant barrier, while 45% expressed apprehensions regarding security vulnerabilities. In response to these challenges, the study proposes a set of policy recommendations aimed at fostering a conducive environment for the adoption of digital currencies in international trade. These include the development of international guidelines for digital currency regulation, the implementation of standardized security protocols, and the establishment of a digital currency trade facilitation body. This research contributes to the ongoing discourse on the integration of digital technologies into the economic and trade landscapes, offering insights into the dynamic interplay between digital currencies and global commerce. It underscores the need for continued exploration, adaptive policies, and innovative solutions to leverage the full potential of digital currencies in facilitating international trade, while addressing the regulatory and security challenges they pose.