[NEWS] Taiwan completes technical study of wholesale CBDC, says central bank vice governor

Vice Governor Chu Mei-lie of the Bank of the Republic of China (BOC), Taiwan's central bank, said the bank has completed technical research into a wholesale CBDC (central bank digital currency). The bank is now actively exploring the possibility of introducing a CBDC.

In his keynote speech on the 7th, Chu revealed that the bank is currently conducting a survey to gather feedback from government agencies, industry, academia, and the public on improving the design of its CBDC platform.

In a wide-ranging presentation on "Banking 4.0," a concept centered on seamlessly integrated services for customers' daily lives, Chu emphasized the incorporation of AI, advanced mobile technology, and digital innovation into banking operations. About half of the speech also delved into CBDC.

Citing a study by the Bank for International Settlements, Chu highlighted CBDC and the tokenization of real-world assets. He spoke about the role of CBDC with clearing capabilities as the fundamental operating basis for tokenization. He mentioned the potential of unified ledger technology to utilize a single ledger to enhance interoperability between systems, especially in partitioned data environments.

Accelerating CBDC development

Following a push from the Bank for International Settlements, central banks around the world are considering the benefits of CBDCs for interbank and individual payments. Taiwan began research on CBDCs in 2020. Development of retail CBDCs has already progressed, with pilot projects involving consumer and five commercial banks.

Zhu presented two significant challenges in Taiwan's CBDC research: concerns about banks' capture of intermediation fees and achieving interoperability with existing payment systems.

Regarding CBDCs, Zhu said they could serve as the operational basis for tokenization. He also noted that traditional financial institutions are exploring the digitization of real-world assets. However, Zhu warned that these innovations "may also pose significant risks to financial stability, consumer protection, anti-money laundering measures, and market integrity."

He continued, "Financial regulators should consider regulatory measures in response to the development trend of tokenization." He emphasized a cautious approach to further CBDC development and said the timeline for a final decision has not yet been determined.

In this regard, Taiwan's Fubon Bank cooperated with Ripple and the Hong Kong Monetary Authority to conduct a pilot project for reverse mortgages using Hong Kong's CBDC, e-HKD. In addition, the bank integrated China's digital yuan into its platform, demonstrating a positive stance on the region's CBDC initiative.

Reference:Keynote speech
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