While the global race to launch central bank digital currencies (CBDCs) heats up, Taiwan’s central bank is taking a measured approach. President Yang Chin-long emphasizes “steady progress over speed,” highlighting that being first doesn’t guarantee success.
UDN, a Taiwanese news outlet, reported on July 7th that Yang pointed to countries with existing or tested CBDCs that haven’t achieved their desired outcomes. This cautious stance doesn’t equate to inactivity, however.
Building Taiwan’s Digital Dollar: Experiments and Prototypes
In June, Yang outlined plans for a digital New Taiwan dollar. The central bank is currently conducting experiments in three key areas to enhance domestic payment efficiency and innovation.
One significant development is a CBDC prototype platform designed for retail payments. This platform boasts impressive capabilities, already supporting digital coupon cash flow operations and processing speeds of 20,000 transactions per second. While a specific issuance date for the CBDC remains undisclosed, the focus on processing efficiency and innovative applications is evident.
Beyond Retail: Exploring Wholesale CBDCs and Tokenization
Taiwan’s central bank isn’t solely focused on retail transactions. A proof-of-concept for a wholesale CBDC is also underway. This initiative combines CBDC with bank deposit tokens, paving the way for a future digital currency system. This system aims to function as a valuable asset for asset tokenization.
Tokenization technology itself holds significant potential. The central bank plans to leverage it to digitally transform both wholesale central bank currency and commercial bank currency, ultimately supporting a wider range of asset tokens. Collaboration with participating banks is key to achieving this goal. A common platform for tokenization is being built, with planned tests in three scenarios: inter-bank transfer of bank deposit tokens and simultaneous delivery of asset tokens with special-purpose digital money.
Also Read: Iran Goes Digital: Trials First CBDC With Tourists On Kish Island
Aligning with Policy and Public Needs
Yang’s emphasis on a cautious approach underscores Taiwan’s commitment to issuing a CBDC that aligns with public digital payment needs and government digital policy goals. Ultimately, the central bank aims to ensure that any CBDC implementation delivers substantial benefits.
This focus on responsible development aligns with the broader financial landscape in Taiwan. The Financial Supervisory Commission recently announced plans to propose new draft regulations for digital assets in September 2024. These regulations aim to create a more effective framework for digital asset markets while prioritizing investor safety.
While Taiwan might not be the first country to launch a CBDC, its focus on well-designed infrastructure and responsible implementation could position it for long-term success in the digital currency landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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