The Central Bank of the Republic of China (Taiwan) is taking a measured approach to developing its central bank digital currency (CBDC), prioritizing long-term success over being the first mover.
Central Bank President Yang Chin-long emphasized that the race to launch a CBDC doesn’t guarantee positive outcomes. He pointed to existing CBDC pilots and implementations in other countries that haven’t yet achieved their desired results (source: UDN, July 7, 2024). Taiwan’s central bank, instead, is prioritizing a well-designed and functional digital currency that caters to the specific needs of its citizens and economy.
Current Initiatives: Experimentation and Innovation
As outlined in a report released on June 7th, 2024, preceding a presentation to the Legislative Yuan’s Finance Committee, the central bank is actively exploring the potential of a digital New Taiwan Dollar through a series of experiments:
Retail Payment Efficiency Platform: A prototype platform supporting retail payments has been developed and tested. This platform boasts impressive transaction processing speeds, reaching up to 20,000 transactions per second. It can also handle the cash flow operations of digital coupons.
Wholesale CBDC Proof-of-Concept: This initiative explores the integration of CBDC with bank deposit tokens, paving the way for a future digital currency system. This system aims to function as a settlement mechanism for asset tokenization.
Tokenization Technology Integration: The Central Bank plans to leverage tokenization technology to transform both wholesale central bank currency and commercial bank currency into digital formats, facilitating the creation and management of various asset tokens. Proof-of-concept trials and collaborations with participating banks are underway to establish a common platform for tokenization.
President Yang reiterated that Taiwan’s cautious approach prioritizes aligning the digital currency with public needs for digital payments and broader government digital policy goals. This ensures a well-rounded solution that delivers substantial benefits to the nation.
The Financial Supervisory Commission (FSC) announced in March 2024 that a new draft of digital asset regulations will be proposed in September 2024. This initiative aims to establish a robust regulatory framework for Taiwan’s digital asset market, safeguarding investor interests.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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