Taiwan has emerged as a key player in the Central Bank digital currency (CBDC) landscape. In a significant development, the island nation has not only built a prototype platform for its potential CBDC but is also gearing up to hold multiple hearings and forums next year to further explore and refine its digital currency initiatives.
Central Bank’s Prudent Approach
Taiwan’s Central Bank Governor, Chin-Long Yang, has emphasized the importance of a “prudent approach” towards the issuance of a CBDC. In a research report presented to the Legislative Yuan, Taiwan’s parliament, Yang highlighted that the central bank has completed two stages of testing and has developed a CBDC prototype platform with a two-tier issuance structure.
“Building a digital currency isn’t an international competition, and the central bank has yet to set a fixed timeline for CBDC issuance,” Yang stated.
Technical Advancements and Features
The CBDC prototype platform developed by Taiwan’s central bank boasts several notable features. On the retail front, the platform has achieved a processing speed of up to 20,000 transactions per second, indicating its potential to handle high-volume transactions efficiently.
Additionally, the central bank plans to explore the use of the CBDC at the wholesale level, exploring its potential as a clearing asset for asset tokenization. The CBDC will initially be non-interest bearing, and the central bank is considering both anonymous and registered CBDC wallet types.
Regulatory Landscape and Crypto Industry
Taiwan’s approach to cryptocurrencies and stablecoins remains distinct from its CBDC research. The central bank has clarified that these assets are separate from the digital currency system and are not part of the CBDC research.
The crypto industry in Taiwan remains largely unregulated, with the financial regulator requiring crypto service providers to comply with anti-money laundering (AML) laws. However, the industry has taken steps to establish a self-supervisory association, and the government has proposed amendments to the AML laws to enhance oversight of domestic and overseas crypto firms operating in the country.
As Taiwan continues to navigate the CBDC landscape, its prudent and comprehensive approach showcases a commitment to carefully evaluating the potential benefits and risks of a central bank-issued digital currency. The upcoming hearings and forums are expected to provide further insights into Taiwan’s vision for a digital currency future.
