The central bank has completed a wholesale feasibility and technology study of a central bank digital currency (CBDC) and is gathering feedback and refining a platform design, Deputy Governor Chu Mei-lie (朱美麗) said yesterday.
Chu shared her views on the evolution and future of CBDCs in a keynote speech at an annual event organized by Financial Information Service Co (財金資訊), which oversees Taiwan’s banking, payment and settlement systems.
CBDCs are similar to cryptocurrencies, except that their value is fixed by a government authority and they are equivalent to a national currency.
Photo courtesy of the central bank
Chu said she agreed with the Bank for International Settlements that existing payment tools and platforms would not always be able to meet needs from all-day transactions, smart contracts and automatic settlements that allow simultaneous and irreversible transfers of assets or funds.
A nation’s monetary system should support tokenized assets and CBDCs might provide ultimate payment and settlement services, including tokenization and a unified ledger to integrate CBDC and traditional currencies, she said.
Unified legers would integrate CBDCs with tokenized real-world assets in the same programmable platform, with the CBDC the core ledger and the ultimate settlement of assets, she said.
The concept of a unified ledger does not mean there is only one ledger, but the tokenized ledger of each economy can coexist and be connected through an application interface to ensure interoperability and therefore reduce the risk of errors in message transmission, she said.
It is also intended to speed up the clearing process, create a safe trading environment and ensure that currency and asset transactions are carried out in a safe, reliable and effective manner, Chu said.
Foreign central banks are exploring and evaluating the feasibility of issuing CBDCs to make sure that all forms of currency have a single value, she said.
Taiwan’s central bank is prudently approaching the issue and has no timetable on when to reach a conclusion, she said.
The monetary policymaker would hold discussions with academics and business sectors while considering its stance, Chu said.
In the meantime, the central bank would seek to improve the overall planning regarding the platform design, transaction ease and capacity, as well as innovative functions, she said.
In addition, it is taking into consideration offline transaction scenarios, she added.
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