Central Bank Digital Currency Approach

Summary:

The Central Bank of the Republic of China (Taiwan) is taking a measured and cautious approach to developing a central bank digital currency (CBDC), focusing on stability and beneficial outcomes over rapid implementation. President Yang Chin emphasized the importance of well-grounded progress, noting that early adopters of CBDCs haven’t always achieved desired results.

In a June 7 report, Yang detailed ongoing experiments to enhance domestic payment systems, including a CBDC prototype for retail payments capable of processing 20,000 transactions per second and a wholesale CBDC proof-of-concept that integrates CBDC with bank deposit tokens.

The central bank is also exploring tokenization technology to digitize both wholesale and commercial bank currencies. This involves proofs-of-concept and collaboration with banks to establish a common platform for tokenization, tested in scenarios like inter-bank transfers and special-purpose digital money. Additionally, the Financial Supervisory Commission plans to propose new digital asset regulations by September 2024 to enhance investor protection and create effective regulatory frameworks.