📋 Group Discussion (GD) Analysis Guide: The Role of Digital Currency in Reshaping Global Trade

🌐 Introduction to the Topic

• 📌 Opening Context: Digital currencies are revolutionizing global trade by enhancing transaction speed, reducing costs, and promoting financial inclusion.
• 📌 Topic Background: The advent of cryptocurrencies like Bitcoin introduced decentralized digital currencies, leading to the development of Central Bank Digital Currencies (CBDCs) by various nations. China’s digital yuan (e-CNY) is a prominent example, aiming to streamline international trade.

📊 Quick Facts and Key Statistics

• 💹 Global Cryptocurrency Market Capitalization: Reached a record $3.2 trillion in November 2024, indicating rapid adoption.
• 💰 Digital Yuan Transactions: Surpassed 7 trillion yuan ($986 billion) by June 2024, reflecting China’s significant progress in digital currency implementation.
• 🌍 Cross-Border Payment Costs: Digital currencies have the potential to reduce transaction costs from an average of 6% to as low as 2%, enhancing trade efficiency.
• 🏦 CBDC Development: As of September 2024, 134 countries, representing 98% of the global economy, are exploring or developing CBDCs.

🤝 Stakeholders and Their Roles

• 🏛️ Governments: Develop and regulate digital currencies to facilitate secure and efficient trade.
• 💻 Private Companies: Innovate blockchain technologies and integrate digital currencies into payment systems.
• 🌐 International Organizations: Establish standards and frameworks for cross-border digital currency transactions (e.g., International Monetary Fund, Bank for International Settlements).
• 👩‍💼 Citizens and Businesses: Adopt digital currencies for faster and cost-effective international transactions.

🏆 Achievements and ⚠️ Challenges

Achievements

• ⚡ Efficiency Gains: Cross-border settlements have been reduced from days to minutes using blockchain technology.
• 💵 Cost Savings: Transaction costs are significantly lower compared to traditional methods.
• 🌍 Financial Inclusion: Digital currencies enable underbanked populations to participate in global trade.
• 📖 Case Study: China’s digital yuan has facilitated quicker payments with Southeast Asian countries.

Challenges

• ⚖️ Regulatory Ambiguity: Lack of universal regulations hampers scalability and adoption.
• 🛡️ Cybersecurity Risks: Digital currencies are vulnerable to cyberattacks and fraud.
• 🌐 Global Coordination: Diverging interests among nations regarding digital currency adoption and standards.

🌍 Global Comparisons

• 🇸🇪 Success: Sweden’s e-krona pilot has demonstrated efficient local and international transactions.
• 🇸🇻 Challenges: El Salvador’s adoption of Bitcoin as legal tender faced low public acceptance and technical issues.

💡 Structured Arguments for Discussion

• Supporting Stance: “Digital currencies enhance global trade efficiency by reducing costs and improving transaction speed.”
• Opposing Stance: “The lack of international consensus on regulation could destabilize financial systems.”
• Balanced Perspective: “While digital currencies promise efficiency, unresolved issues like security and regulation remain critical.”

🗣️ Effective Discussion Approaches

• 📊 Opening Approaches:
  • Data-Driven: “Digital trade via blockchain saved $2 billion in settlement fees in 2023.”
  • Comparative: “China’s digital yuan outpaces most nations in cross-border trade readiness.”
• 📌 Counter-Argument Handling: Acknowledge regulatory gaps but highlight proactive steps by entities like the IMF to establish frameworks.

📈 Strategic Analysis of Strengths and Weaknesses

• Strengths: Speed, transparency, cost-efficiency.
• Weaknesses: Regulatory uncertainty, cybersecurity vulnerabilities.
• Opportunities: Expansion of cross-border trade, innovation in financial technologies.
• Threats: Digital divide, resistance to adoption by traditional financial institutions.

🎓 Connecting with B-School Applications

• 🌍 Real-World Applications: Exploring CBDCs for global supply chain management and international finance projects.
• 📚 Sample Questions:
  • “What role can digital currencies play in enhancing global supply chain efficiency?”
  • “Evaluate the impact of CBDCs on trade disparities between developed and developing nations.”
• 💡 Insights for Students: Analyze trends in digital currency adoption; suggest regulatory frameworks during internships or research projects.