The Central Bank of the Republic of China (Taiwan) has announced that it is in no hurry to launch a central bank digital currency (CBDC), emphasizing a focus on steady progress and operational efficiency through advanced technologies like smart contracts.
Focus on Efficient Operations with Tokenization
The bank aims to enhance operational efficiency by utilizing special purpose tokens for government tenders. These tokens will leverage smart contracts to streamline bids and performance bonds, as outlined by the bank.
Steady Progress Over Speed in CBDC Development
Central Bank President Yang Chin-long stated that developing a CBDC is not a race. He highlighted that the success of a CBDC doesn’t depend on being the first to market, pointing out that other countries have yet to achieve significant success with their CBDC initiatives.
Yang’s comments were reported by UDN on July 7, reflecting the central bank’s commitment to a measured approach rather than rushing the process.
Plans for Taiwan’s Digital Dollar
In a June 7 report presented to the Finance Committee of the Legislative Yuan on June 10, Yang detailed the central bank’s plans for a digital New Taiwan dollar. The report emphasized three experimental scenarios aimed at improving domestic payment efficiency and fostering innovation.
While there is no specific timetable for issuing a CBDC, the central bank is actively working on enhancing payment system processing and exploring innovative applications.
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Retail and Wholesale CBDC Prototypes
One of the key developments is a CBDC prototype platform designed for retail payments. Yang mentioned that this platform could support digital coupons’ cash flow operations, with transaction processing speeds reaching 20,000 transactions per second.
Additionally, the central bank is developing a proof-of-concept for a wholesale CBDC. This initiative integrates CBDC with bank deposit tokens to create a future digital currency system, serving as a liquidation asset for asset tokenization.
Advancements in Tokenization Technology
Taiwan’s central bank is also focusing on tokenization technology to digitally transform wholesale central bank and commercial bank currencies, supporting various asset tokens. Proofs-of-concept are underway, and the bank is collaborating with participating banks to build a common tokenization platform.
The platform will be tested in three scenarios:
- Inter-bank transfer of bank deposit tokens
- Simultaneous delivery of asset tokens
- Special-purpose digital money
Yang reiterated that Taiwan’s cautious approach to issuing a CBDC aims to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.
In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations in September 2024. These regulations aim to create a safer and more effective framework for digital asset markets, ensuring investor protection.
