Taiwan Central Bank Takes Cautious Approach to CBDC Launch

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Taiwan Central Bank Takes Cautious Approach

YEREVAN (CoinChapter.com) — The Central Bank of the Republic of China, led by President Yang Chin-long, has taken a cautious stance on launching a central bank digital currency (CBDC). Yang emphasized that the goal is not to be first but to ensure steady progress. He pointed out that other countries that have already issued or tested CBDCs haven’t achieved the desired results, according to a July 7 report by UDN.

Taiwan's Cautious CBDC Approach — *Taiwan’s Cautious CBDC Approach․ Source: UDN Report*

In a June 7 report, Yang outlined the central bank’s plans for a digital New Taiwan dollar. Speaking to the Finance Committee of the Legislative Yuan on June 10, he detailed ongoing experiments aimed at improving domestic payment efficiency and innovation. There is currently no set timetable for issuing a CBDC. However, efforts to enhance the payment system’s processing efficiency and applications are in full swing.

Testing for Faster Payments and Efficiency

One development is the creation of a CBDC prototype platform designed for retail payments. Yang highlighted that this platform can support the cash flow operation of digital coupons. It can handle transaction processing speeds of up to 20,000 transactions per second.

Additionally, the central bank is working on a proof-of-concept for a wholesale CBDC. This initiative aims to combine CBDC with bank deposit tokens to build a future digital currency system. The goal is to serve as a liquidation asset for asset tokenization, laying the groundwork for a more efficient financial system.

Yang stated,

“We are conducting experiments in three scenarios to enhance payment efficiency and innovation.”

These scenarios are crucial in determining how best to implement a CBDC that meets public needs and government digital policy goals.

Taiwan Central Bank Embraces Tokenization for Digital Economy

Taiwan’s central bank plans to use tokenization technology to digitally transform wholesale central bank currency and commercial bank currency. This transformation supports various asset tokens, facilitating a more robust digital economy. To achieve these objectives, the central bank is conducting proofs-of-concept and collaborating with participating banks to build a common platform for tokenization.

This platform will be tested in three scenarios. The first is inter-bank transfer of bank deposit tokens. The second is simultaneous delivery of asset tokens. The third is special-purpose digital money. These tests are essential for ensuring the platform’s efficiency and reliability.

In March, the Financial Supervisory Commission announced plans to propose a new draft of digital asset regulations by September 2024.