Taiwan’s central bank announced they follow a careful approach to the development of a central bank digital currency, the CBDC, wanting for real progress rather than haste.
No rush for a CBDC
Yang Chin-long, the President of the Central Bank of the Republic of China, stated that developing a CBDC is not a race, and rushing to launch a CBDC doesn’t ensure its success.
Yang referred to other countries that have issued or tested CBDCs without achieving the expected results, according to a report by UDN on July 7. For them, the focus is on steady advancement, not speed.
On June 7, prior to presenting to the Finance Committee of the Legislative Yuan on June 10, Yang shared the central bank’s plans for a digital New Taiwan dollar.
The bank is experimenting with three scenarios to improve domestic payment efficiency and innovation.
Right now, there is no set timeline, or deadline for issuing a CBDC, the main goal of efforts is to raise the payment system’s processing efficiency.
Retail and wholesale
One key development is a CBDC prototype platform for retail payments. Yang mentioned this platform supports the cash flow operation of digital coupons and can handle up to 20,000 transactions per second.
Additionally, a proof-of-concept for a wholesale CBDC is underway, combining CBDC with bank deposit tokens to create a future digital currency system.
This system is intended to function as a liquidation asset for asset tokenization.
The central bank also plans to use tokenization technology to digitally transform both the wholesale central bank currency and commercial bank currency, supporting various asset tokens.
To achieve this, Taiwan’s central bank is conducting proofs-of-concept and working with commercial banks to build a common, shared platform for tokenization.
New platform, new regulations
This platform will be tested in three scenarios, in inter-bank transfer of bank deposit tokens, simultaneous delivery of asset tokens, and special-purpose digital money.
Yang stressed that Taiwan’s careful approach to issuing a CBDC wants to meet public digital payment needs and align with government digital policy goals, ensuring tangible benefits.
In March, the Financial Supervisory Commission announced it would propose a new draft of digital asset regulations for Taiwan in September 2024.
The goal is to create more effective regulations for digital asset markets and ensure investor safety.
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