Taiwan's central bank takes cautious approach

Yerevan (CoinChapter.com) – The Central Bank of the Republic of China, led by Chairman Yang Jinlong, has taken a cautious stance on the launch of a central bank digital currency (CBDC). Chairman Yang stressed that the goal is not to be the first, but to ensure steady progress. He pointed out that other countries that have issued or tested CBDCs have not achieved the expected results, according to a July 7 report by United Daily News.

Taiwan’s cautious approach to CBDC. Source: United Daily News

In a June 7 report, Yang Jinlong outlined the central bank’s plans for a digital New Taiwan dollar. He detailed to attendees at the June 10 Legislative Yuan Financial Committee meeting the ongoing experiments aimed at improving domestic payment efficiency and innovation. No timetable has yet been set for issuing a CBDC. However, efforts to improve payment system processing efficiency and applications are in full swing.

Testing for faster payments and efficiency

One of the developments is the creation of a CBDC prototype platform designed for retail payments. Chairman Yang stressed that the platform can support cash flow operations for digital coupons. It can handle processing speeds of up to 20,000 transactions per second.

In addition, the central bank is conducting a proof-of-concept on wholesale CBDC. The initiative aims to combine CBDC with bank deposit tokens to build a future digital currency system. Its goal is to serve as a clearing asset for asset tokenization and lay the foundation for a more efficient financial system.

Chairman Yang said these scenarios are critical to determining how best to implement a CBDC that meets public needs and the government’s digital policy goals.

Taiwan’s Central Bank Embraces Tokenized Digital Economy

The Central Bank of Taiwan plans to use tokenization technology to digitally transform wholesale central bank money and commercial bank money. This transformation supports various asset tokens and promotes a stronger digital economy. To achieve these goals, the central bank is conducting proof of concept and working with participating banks to establish a common platform for tokenization.

The platform will be tested in three scenarios. The first is an interbank transfer of bank deposit tokens. The second is the simultaneous delivery of asset tokens. The third is a dedicated digital currency. These tests are essential to ensure the efficiency and reliability of the platform.

In March, the Financial Supervisory Commission announced plans to propose new draft regulations for digital assets by September 2024.