Taiwan weighs up CBDC following feasibility study completion
Taiwan’s central bank, the Central Bank of the Republic of China (Taiwan), recently concluded an in-depth feasibility and technology study on the potential implementation of a wholesale central bank digital currency (CBDC).
Gathering feedback and refining design
According to statements made by Deputy Governor Chu Mei-lie while speaking at an annual event organized for the banking sector by the Financial Information Service Co., an entity that oversees Taiwan’s banking, payment and settlement systems, Chu disclosed that the central bank is now in the process of gathering feedback and refining the design of the CBDC platform.
In her keynote speech, Chu underscored the significance of CBDCs in the evolving landscape of digital currencies. She concurred with the Bank for International Settlements’ (BIS) assertion that conventional payment tools and platforms may not always meet the demands of all-day transactions, smart contracts and automatic settlements facilitating simultaneous and irreversible transfers of assets or funds.
Supporting asset tokenization
Chu emphasized that a nation’s monetary system should be poised to support tokenized assets. CBDCs, she suggested, could potentially offer comprehensive payment and settlement services, integrating tokenization and a unified ledger that harmonizes CBDCs with traditional currencies.
The concept of a unified ledger, as explained by Chu, doesn’t imply a single ledger but rather that tokenized ledgers of each economy could coexist and connect through an application interface.
This approach aims to ensure interoperability, minimizing the risk of errors in message transmission. Interoperability is also being worked on by financial messaging service SWIFT. It recently collaborated with central banks in Hong Kong and Kazakhstan with a view towards testing a connector that would enable the integration of SWIFT with CBDCs.
Additionally, a unified ledger is anticipated to expedite the clearing process, foster a secure trading environment and ensure the safe, reliable and effective execution of currency and asset transactions.
International integration of e-CNY
Chu acknowledged that foreign central banks are actively exploring the feasibility of issuing CBDCs to establish a unified value for all forms of currency. Of the many early-stage CBDC projects that are out there, China’s e-CNY has gathered the greatest momentum.
British bank Standard Chartered has been the most recent entity to join the Chinese CBDC international pilot project. Taiwan’s Fubon Bank has enabled its customers to top up e-CNY via mobile banking. The leading CBDC currency has similar collaborations in place with Hong Kong banks, HSBC and Hang Seng Bank.
Fubon has also gotten involved alongside Ripple in a pilot program run by the Hong Kong Monetary Authority. Through that collaboration, it is supporting an asset tokenization trial that revolves around Hong Kong’s CBDC, the e-HKD.
Chu outlined that in the case of Taiwan, the matter of a CBDC is being pursued cautiously, without a predefined timetable for reaching a conclusion. The monetary policymaker plans to engage in discussions with academic and business sectors to inform its stance on CBDCs.
Meanwhile, the central bank is committed to enhancing overall planning related to the CBDC platform, focusing on transaction ease, capacity and innovative functionalities. Chu also highlighted the consideration of offline transaction scenarios in this ongoing process.
