In a world rushing towards digitization of currency, Taiwan’s Central Bank maintains a measured approach to the adoption of a central bank digital currency (CBDC).
President of the Central Bank of the Republic of China, Yang Chin-long, emphasized that Taiwan is not in a race to launch a CBDC but is instead focused on ensuring the technology is robust and beneficial for its economy.
This perspective comes amid growing global interest in CBDCs, with various nations experimenting with their digital currency implementations.
According to Yang, the objective is not merely to be the first in launching a CBDC but to create a system that genuinely enhances the financial infrastructure’s efficiency and inclusivity.
During a presentation to the Finance Committee of the Legislative Yuan, Yang outlined that rushing the introduction of a CBDC does not equate to success. He highlighted that some countries have not achieved the expected benefits from their early launches, which serves as a cautionary tale for Taiwan.
Innovative Applications and Experiments in Progress
Taiwan’s Central Bank is currently exploring multiple applications of blockchain and tokenization technology to improve the functionality and efficiency of its financial systems. One key area of development is the use of special purpose tokens for government tenders. By leveraging smart contracts for bids and performance bonds, the Central Bank aims to enhance operational efficiency significantly.
Moreover, Yang revealed that the bank is conducting tests in three specific scenarios to enhance domestic payment systems and encourage financial innovation. There is no set timeline for the release of a CBDC, but the bank is making considerable strides in developing a prototype platform for retail payments.
This platform has shown capability in handling digital coupon transactions, supporting up to 20,000 transactions per second. Additionally, the Central Bank is working on a proof-of-concept for a wholesale CBDC, which would integrate CBDC with bank deposit tokens to create a more fluid digital currency system.
The bank’s plans extend to applying tokenization technology to digitally transform both wholesale central bank currency and commercial bank currency. This initiative will support various asset tokens, aligning with Taiwan’s broader goals to adapt its financial systems to the digital age.
Collaborations with participating banks aim to construct a common platform for tokenization that will test scenarios like inter-bank transfers of bank deposit tokens and the delivery of asset tokens alongside special-purpose digital money.
Yang’s cautious yet forward-thinking approach underlines Taiwan’s commitment to meeting its digital payment needs and the government’s digital policy goals effectively. The strategy ensures that when a CBDC is eventually introduced, it will bring substantial benefits, align with public expectations, and support the broader economic landscape.