Taiwan Central Bank States No Timetable for Digital Currency Launch

Highlights:

• Due to project complexity, Taiwan’s central bank has indefinitely delayed its CBDC launch.
• Public hearings and forums are planned next year to educate and engage the public about CBDCs.
• Despite the delay, Taiwan continues to explore innovative applications and tokenization technology for its CBDC.

Taiwan’s central bank has announced that it has no timetable for launching a central bank digital currency (CBDC), putting the project on indefinite hold. The Central Bank of the Republic of China cited the initiative’s immense complexity and emphasized the necessity for extensive public communication before any implementation can proceed.

The bank has been piloting a government-run digital currency for the past four years. It intends to enable users to make payments electronically via digital wallets, eliminating the need for traditional credit or debit cards. Despite the promising advancements, the bank’s president, Yang Chin-long, stated that there is no rush to launch the CBDC, emphasizing a focus on steady progress over speed.

No Rush for CBDC Launch

Yang, scheduled to address lawmakers on Monday, stressed that developing a CBDC is not a race. According to a recent report, countries that have already issued or tested digital currencies have not seen the anticipated results. Yang reiterated that being the first to introduce a CBDC does not guarantee success.

In a report released on June 7, before his presentation to the Finance Committee of the Legislative Yuan, Yang outlined the central bank’s plans for a digital New Taiwan dollar. The report detailed experiments in three scenarios to enhance domestic payment efficiency and innovation.

One significant development is a CBDC prototype platform designed for retail payments. This platform, capable of supporting the cash flow operation of digital coupons, can process up to 20,000 transactions per second. Additionally, a proof-of-concept for a wholesale CBDC is being developed, combining CBDC with bank deposit tokens to construct a future digital currency system.

The central bank also plans to apply tokenization technology to digitally transform wholesale central bank currency and commercial bank currency, supporting various asset tokens. This initiative involves conducting proofs-of-concept and collaborating 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.

Public Hearings and Future Plans

Given the project’s complexity and potential impact, the central bank has planned public hearings and forums for the next year to promote knowledge and transparency regarding the CBDC. “The promotion of central bank digital currency is a huge and complex project that will need to be carried out for a long time,” the report quoted the central bank as saying. Given the currency’s launch will affect many people, it is necessary to communicate widely about it.”

The central bank acknowledged that ongoing research and experimentation have proven that digital currency can improve Taiwan’s payment system’s processing efficiency and innovative applications. However, the bank’s cautious approach aims to meet public digital payment needs while aligning with government digital policy goals.

Legislative and Regulatory Developments

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024. These regulations aim to improve digital asset market oversight and ensure investor safety.

Yang’s presentation to the Finance Committee will further detail these plans. It will include the central bank’s ongoing efforts to improve the payment system’s efficiency and innovative applications. Although there is no set timetable for issuing a CBDC, the bank continues its research and experimentation. Consequently, it aims to achieve substantial benefits for the public.

Globally, 134 countries, representing 98% of the global economy, are exploring digital versions of their currencies. More than half of these countries are in advanced development, pilot, or launch stages. Supporters of digital currencies argue that they offer new functionalities and provide an alternative to physical cash. However, these initiatives have also sparked protests in some countries due to concerns over potential government surveillance.