The Central Bank of Taiwan has recently shared its stance regarding CBDCs. The Central Bank of the Republic of China makes note recently hinted at trading government bonds via special purpose tokens for added operational efficiency, smart contract utility, and inviting digital bids for performance bonds.
Governor Yang Chin-long of the Chinese Central Bank noticed that the country is not in a CBDC competition and the monetary authority is currently focused on consistent progress.
CBDC Research Projects
Yang further stated that the first CBDC is not going to be a guaranteed success project. Therefore, many nations have started to issue CBDC pilots as tests or research projects.
At the same time, there are many instances where the CBDCs have failed to produce the correct results or meet performance expectations. The statement was published in local media outlet UDN on 7th July.
The Central Bank governor also presented the plan for the new Taiwan dollar on 10th June as head of the Financial Committee of Legislative Yuan. He noticed that the central bank is in the process of conducting tests and experiments based on various scenarios.
The aim of the monetary authority is to improve the domestic payment process and incorporate innovation. At the same time, there is no standardized timetable or window available to finalize a CBDC launch.
Distinctions Between the Digital Taiwan Project and Digital Yuan Project
As per the details provided by the Chinese central bank governor, the digital Taiwan project has some important distinctions from its Yuan counterpart. The first one is that the prototype is specifically catering to retail consumers and everyday payments.
Yang has stated that the digital payments network has cash flow support features and processing digital coupons. He further stated that the transaction speed of the network at this stage has the ability to support 20 thousand transactions per second.
At the same time, the government intends to incorporate the proof of concept method for their wholesale CBDC network. However, this project is still under development and has added options such as bank deposit tokens in order to implement a unique and futuristic digital payments system. The platform is focused on enabling asset liquidations as a way to promote asset tokenization.
The Central Bank has also dedicated resources to build tokenization technology. This technology is directed towards building upon the wholesale digital currency and commercial bank currency.
It will also expand the tokenization process for different types of asset classes. At the same time, the Central Bank of Taiwan has conducted proof of concept research and working in tandem with partnering banking firms as a way to put together a united tokenization platform.
Chinese Central Bank Governor Mentions the Benefits of CBDCs
The governor of the Chinese Central Bank recently stated that the platform has plans to test the under the development of CBDCs in preset scenarios. One of these scenarios is in the case of the inter-bank exchange of bank reserves via deposit tokens.
Another situation is to enable the simultaneous delivery of tokenized assets. The final option to employ this tech is accessing special-purpose digital monetary resources. Yang has noticed that Taiwan is taking a careful approach on the matter of the CBDC launch.
The central bank is also collecting feedback from consumers and local businesses in order to fulfill the requirements of direct consumers. At the same time, there is also the need to make and implement government-issued policies and legal frameworks for standardized operational efficiency and maximizing the inherent advantages.
In March, The Financial Supervisory Commission declared that it was working on a new draft deal on the matter of digital asset regulations. This deal will help Taiwan to streamline the process of CBDCs in September 2024. The same draft will also incorporate effective regulatory reforms directed towards digital asset markets and ensure the security for the stakeholders and consumers of the product.
