In a recent speech, Governor Yang of the Central Bank of the Republic of China (Taiwan) said the central bank was considering both a retail and wholesale central bank digital currency (CBDC). It completed its latest retail CBDC trial three months early.
As with many other parts of the world, digitalization is a key driver of Taiwan’s CBDC research. In 2017 electronic payments accounted for 40% of transactions compared to 60% in the first quarter of this year. This decline in cash usage means giving the public access to a secure and cost-effective digital currency will be important. There may also be concerns about the power of private monopolies controlling the key retail payment system.
The bank completed its first research project in June 2020, a technical feasibility study using decentralized technology for wholesale CBDC. It wasn’t satisifed with the operational efficiency of blockchain technology at that stage. The second phase was a “Universal CBDC Pilot Program” to trial the retail payment scenario with the help of five banks, China Trust, Huanan, Shanghai, Cathay United World Bank and Taishin. Although it was expected to end this September, it was completed three months early.
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