What is Retail CBDC? A "Digital Cash" Issued by the Central Bank
The central bank's definition of retail CBDC has the same legal status as cash, and is a "digital form of legal tender". It is directly issued by the central bank, without credit or liquidity risks, and has legal tender status. In the future, it can be used for daily transactions, like a digital counterpart to paper money and coins. This system operates on a "two-tier platform architecture", with the central bank providing the basic platform, issuance, and clearing mechanism, while private intermediary institutions (such as banks and payment service providers) are responsible for wallet creation, application development, and service provision.
Motivation for Issuing Digital Cash: Inclusive Finance and Payment Upgrade
The central bank points out that the goals of promoting digital cash include:
Responding to Financial Digitalization Trend: Strengthening the country's payment infrastructure.
Deepening Inclusive Finance: Allowing groups without credit cards or bank accounts to easily participate in the digital economy.
Improving Cross-border Payment and Emergency Subsidy Distribution Efficiency.
Maintaining Cash Coexistence Flexibility: Cash will continue to circulate even with digitalization.
Design Three Principles: Harmless, Coexistence, Promote Innovation
The design of retail CBDC revolves around three principles:
Do No Harm: Do not interfere with central bank monetary policy and financial stability, no interest, avoid attracting too much funds out of the banking system.
Coexistence: Coexist with cash and bank deposits, avoiding forced switching of payment methods.
Innovation: Combine public and private sector forces to promote payment efficiency and market competition.
Multiple Wallet Types, Meeting Various Identity Usage Needs
Digital wallets are divided into "named wallets" and "unnamed wallets", with different usage limits based on user identity verification:
| Type | Balance Limit | Daily Transaction Limit | Target |
|---|---|---|---|
| Domestic Corporate Named Wallet | 5 million | 1 million | Enterprises |
| Domestic Individual Named Wallet | 100,000 | 100,000 | Individuals |
| Unnamed Wallet (Domestic) | 30,000 | 30,000 | Mobile verification |
| Unnamed Wallet (Foreign Travelers) | 30,000 | 30,000 | Foreign mobile verification |
Named wallets support recovery mechanisms (such as in case of phone loss), while unnamed wallets are more similar to cash concepts, with no recovery if lost.
Basic Functions: Supporting Transfers to Offline Payments
Digital cash wallets will provide the following functions:
Transfers and Payments: Support alias, cross-platform transfers, and automatic deductions.
Top-up and Redemption: Freely convertible with cash or bank accounts.
Offline Payment (Planned): Transactions possible without internet, enhancing application flexibility.
Innovative Application Scenarios Diverse: Digital New Taiwan Dollar Not Just a Payment Tool
The central bank's designed application functions are highly creative, targeting three major scenarios: families, government, and business:
Parent-Child Wallet Management
Parents can set up periodic pocket money distribution to children's wallets, and limit spending amount and purpose, establishing a financial education environment for the digital age.
Merchant Cashback Activities
Wallet can automatically identify cashback eligibility, such as meeting in-store consumption frequency, directly crediting cashback, saving paper and labor costs.
Project Payments Based on Progress
Government or enterprises can automatically disburse funds through smart contracts based on project progress, avoiding disputes and delays.
Government Emergency Assistance
Citizens can directly register and receive subsidies through the App, avoiding queuing and procedures, with quick account credit.
Digital Voucher Integrated Payment
Supporting "cash + voucher" payment mode, in the future, citizens can complete payment with just one screen when using digital vouchers, convenient and fast.
Personal Information Protection and Security Design: Balancing Privacy and Transaction Security
The central bank emphasizes that intermediary institutions must preserve and manage user data according to the Personal Information Protection Act, with the digital cash platform itself retaining only de-identified information. If judicial units need to access data, they must proceed according to law. The platform simultaneously introduces international ISO standards, public-private key encryption, and in-depth defense mechanisms to ensure transaction authenticity and anti-hacking capabilities. Currently, the central bank has not yet decided on the official issuance timeline for CBDC, but plans to hold multiple public hearings and information sessions between April and December 2025 to collect opinions from various sectors. Meanwhile, they are discussing relevant legal foundations, including privacy protection and issuance authorization, and may draft specific legislation.
Risk Warning
Cryptocurrency investment carries high risk, with potentially significant price volatility, and you may lose all principal. Please carefully assess the risks.
