Taiwan’s central bank has recently concluded a comprehensive study on the viability of wholesale central bank digital currency (CBDC) and is actively contemplating its potential implementation.

Deputy Governor Mei-lie Chu announced on December 7th that the central bank is now seeking input from both businesses and academics. The focus will shift towards refining the platform design, with ongoing efforts in soliciting feedback and engaging in further research.

In an extensive address during a banking event, Chu expounded on the concept of “Banking 4.0,” emphasizing services seamlessly integrated into customers’ daily lives.

This vision encompasses the amalgamation of artificial intelligence and cutting-edge mobile and digital technologies within the banking sector. Notably, approximately half of Chu’s presentation was dedicated to the topic of CBDC.

Taiwan Central Bank Highlights CBDC Benefits, Progress, and Challenges

Citing research from the Bank for International Settlements, Chu underscored the advantages associated with CBDCs and the tokenization of real-world assets. She highlighted the potential for a central bank currency with clearing finality to serve as a foundational element for the tokenization process.

In this context, Chu specifically referenced unified ledger technology, which employs a singular ledger within a partitioned data environment to foster interoperability among various systems.

Taiwan initiated CBDC research in 2020, with a more advanced focus on the development of a retail CBDC, having undergone testing in a pilot project involving consumers and five commercial banks.

Challenges such as bank disintermediation and interoperability with existing payment systems are still under consideration, with Chu expressing a cautious approach to further CBDC development and an absence of a predefined timeline for a decision.

Fubon Bank Partners on CBDC Pilots, Taiwan Central Bank Advances CBDC Exploration

Fubon Bank

Notably, Fubon Bank in Taiwan has collaborated with Ripple and the Hong Kong Monetary Authority in a reverse mortgage pilot project utilizing Hong Kong’s e-HKD CBDC. Furthermore, the bank has integrated China’s digital yuan, known as the e-CNY, into its platform.

In summary, Taiwan’s central bank is actively advancing its exploration of CBDCs, soliciting feedback, and refining platform design, all while navigating challenges and taking a prudent approach towards further development.

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