Home web3.0 Taiwan Central Bank Takes Cautious Stance on Launching CBDC, Embraces Tokenization for Digital Economy

Taiwan Central Bank Takes Cautious Stance on Launching CBDC, Embraces Tokenization for Digital Economy

Jul 12, 2024 pm 02:36 PM

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).

Taiwan Central Bank Takes Cautious Stance on Launching CBDC, Embraces Tokenization for Digital Economy

Taiwan’s central bank is taking a measured approach to launching a central bank digital currency (CBDC), aiming to strike a balance between innovation and ensuring the public’s needs are met.

Led by President Yang Chin-long, the central bank is proceeding cautiously. The goal, according to Yang, is not to be the first to launch a CBDC but to achieve steady progress.

In a July 7 report by UDN, Yang highlighted that several countries that have already issued or tested CBDCs have not achieved the desired outcomes. Meanwhile, Taiwan is conducting experiments in three scenarios to enhance payment efficiency and innovation.

Back in June, Yang outlined the central bank’s plans for a digital New Taiwan dollar in a June 7 report. Later, he elaborated on the experiments during a June 10 appearance before the Finance Committee of the Legislative Yuan.

Taiwan’s central bank is testing a CBDC prototype platform for retail payments that can support the cash flow operation of digital coupons. The platform is capable of handling transaction processing speeds of up to 20,000 transactions per second.

Moreover, the central bank is working on a proof-of-concept for a wholesale CBDC that will combine CBDC with bank deposit tokens to build a future digital currency system. The aim is to use the CBDC as a liquidation asset for asset tokenization, paving the way for a more efficient financial system.

“We are conducting experiments in three scenarios to enhance payment efficiency and innovation,” Yang said, adding that these scenarios are crucial for determining how best to implement a CBDC.

Meanwhile, Taiwan’s central bank is also embracing tokenization for the digital transformation of the wholesale central bank currency and commercial bank currency to support various asset tokens and facilitate a digital economy.

To achieve this, the central bank is conducting proofs-of-concept and working with participating banks to build a common platform for tokenization. This platform will be tested in three scenarios: inter-bank transfer of bank deposit tokens, simultaneous delivery of asset tokens, and special-purpose digital money.

The tests are designed to ensure 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.

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