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Taiwan Central Bank Completes Feasibility Study on Wholesale CBDC

Taiwan Central Bank Completes Feasibility Study on Wholesale CBDC

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TL;DR

  • Taiwan’s central bank has completed a feasibility study on wholesale Central Bank Digital Currency (CBDC), contemplating its implementation. Deputy Governor Mei-lie Chu highlights the importance of a prudent approach and seeks input from businesses and academics as the nation explores broader payment modernization initiatives.
  • Insights and Integration: Drawing from Bank for International Settlements research, Chu emphasizes the advantages of CBDCs and tokenization of real-world assets. The significance of unified ledger technology in achieving interoperability is highlighted, showcasing Taiwan’s commitment to staying at the forefront of digital currency innovation.

Taiwan’s central bank has concluded a feasibility study on wholesale central bank digital currency (CBDC) and is actively considering its implementation. Deputy Governor Mei-lie Chu announced on December 7 that the central bank has finalized its study and is now seeking input from businesses and academics to inform the next steps. The focus is not only on CBDC but also on broader payment modernization initiatives as Taiwan delves into the realm of Banking 4.0.

Taiwan exploring CBDC integration in Banking 4.0

Deputy Governor Chu, in a comprehensive speech at a banking event, outlined Taiwan’s vision for Banking 4.0, emphasizing services seamlessly embedded in customers’ daily lives. The vision includes the integration of artificial intelligence and cutting-edge mobile and digital technology into banking operations. Notably, about half of Chu’s presentation was dedicated to the discussion of CBDC, signaling the central bank’s strategic interest in advancing digital currency solutions.

Drawing insights from research conducted by the Bank for International Settlements (BIS), Deputy Governor Mei-lie Chu underscored the multifaceted benefits of Central Bank Digital Currencies (CBDCs) and the tokenization of tangible assets. Chu specifically emphasized the pivotal role a central bank currency with clearing finality could play as the operational bedrock for tokenization processes. The concept involves ensuring that transactions on the blockchain are irreversible, providing a secure foundation for the representation of real-world assets as digital tokens.

Furthermore, Deputy Governor Chu highlighted the significance of unified ledger technology in the context. Unified ledger technology operates by utilizing a single ledger within a partitioned data environment, fostering interoperability among different systems. The approach is instrumental in streamlining and enhancing the efficiency of transactions, making it a crucial component in the exploration of CBDCs and the broader adoption of tokenization within the financial landscape.

Retail CBDC development and pilot testing

Taiwan initiated its CBDC research in 2020, with a notable focus on both wholesale and retail CBDCs. The country has made considerable progress in developing a retail CBDC, having already tested it in a pilot project involving consumers and five commercial banks. The ongoing research has explored challenges related to bank disintermediation and interoperability with existing payment systems, crucial aspects that need careful consideration in the development of a CBDC.

Deputy Governor Chu emphasized a “prudent” approach to the further development of a CBDC, indicating that the central bank is prioritizing careful consideration over expedited decision-making. There is currently no specific timeline for a final decision on the introduction of a CBDC. Meanwhile, Taiwan’s Fubon Bank has actively participated in collaborative initiatives, including a reverse mortgage pilot project with Ripple and the Hong Kong Monetary Authority, leveraging Hong Kong’s e-HKD CBDC. Additionally, Fubon Bank has integrated China’s digital yuan, known as the e-CNY, into its platform.

Conclusion

Taiwan’s exploration of a wholesale Central Bank Digital Currency (CBDC) marks a significant stride toward modernizing its financial infrastructure. Deputy Governor Mei-lie Chu’s emphasis on a prudent approach, coupled with insights from the Bank for International Settlements, reflects a comprehensive strategy in navigating the complex landscape of digital currencies. As Taiwan continues its journey towards CBDC implementation and Banking 4.0, the collaboration with global research institutions and the integration of innovative technologies underscore the nation’s commitment to fostering a secure, efficient, and forward-looking financial ecosystem. Stay tuned for further developments as Taiwan navigates the intricate intersection of technology, finance, and regulatory considerations.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Haseeb Shaheen

As a Web Researcher and Internet Marketer, Haseeb Shaheen delivers relevant valuable content for audiences. He focuses on financial and crypto market analysis, as well as technology-related areas that help people change their lives.

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