CBDC

As central banks around the world actively explore Central Bank Digital Currencies (CBDCs), Taiwan has also launched in-depth discussions on the potential introduction of a “digital New Taiwan dollar.” Deputy Director Yueh-Ping Yang was interviewed by Taiwan Banker magazine, where he provided an in-depth analysis of the legal and policy implications of CBDC implementation in Taiwan, as well as the potential challenges and regulatory measures it entails.

Deputy Director Yueh-Ping Yang first emphasized that the development of CBDCs is not merely a technological upgrade, but rather a profound reconstruction of legal and policy frameworks. Under the currently prevailing “two-tier architecture” of CBDCs, the roles and relationships between central banks, commercial banks, and the general public as CBDC holders will need to be redefined. In addition, regulatory adjustments will be required in three major areas: personal data protection, supervisory frameworks, and legal authorization.

Addressing privacy concerns—the most controversial aspect of CBDCs—Yang noted the inherent tension between anonymity and anti-money laundering (AML) measures. He explained that the key to mitigating privacy concerns lies in how intermediary institutions (such as banks or payment providers) within the two-tier framework manage transaction data. If intermediaries are required to transmit transaction data back to the central bank, the central bank would hold comprehensive CBDC transaction records, which raises surveillance concerns. Conversely, if no transaction data are transmitted, systemic resilience may be weakened, increasing operational risks.

Deputy Director Yueh-Ping Yang further highlighted that, within the two-tier system, questions regarding the status, regulation, and liability of intermediary institutions must be clarified before CBDC adoption. He also noted that whether the central bank should be empowered to revoke or freeze unlawful transactions under specific circumstances would require dedicated legislative support. Finally, he pointed out that cross-border payments and international regulatory cooperation will present additional challenges for CBDC implementation in the future.

For the full Taiwan Banker report, please refer to: https://service.tabf.org.tw/FBS/SinglePage/625337