Taiwan's payment landscape is undergoing a quiet revolution from top to bottom. The Central Bank officially revealed the complete design blueprint for the "Central Bank Digital Currency" (CBDC) at a public hearing on the 10th, which is not just about digitizing the New Taiwan Dollar, but also includes a grand vision behind its design and mechanism.
The Central Bank plans to launch the first wave of "digital vouchers" in cooperation with the digital development department and Hakka committee as early as July this year, marking the transition of the digital New Taiwan Dollar from conceptual proof to official public testing.
Retail CBDC Designed as a "Public-Private Dual-Layer Architecture"
The Central Bank's retail CBDC digital New Taiwan Dollar will adopt the internationally mainstream "dual-layer platform architecture". Simply put, the central bank is responsible for building the underlying issuance and clearing platform, ensuring its legal tender status and security; while wallet opening, app development, and various innovative applications directly related to the public will be left to private sector banks and electronic payment providers.
This means that in the future, people will not need to download a new "Central Bank Stablecoin App", but can seamlessly use the digital New Taiwan Dollar through their familiar bank or payment apps.
Painless Upgrade, Cash Coexistence
The Central Bank emphasized at the public hearing that issuing the digital New Taiwan Dollar is not about eliminating physical cash, but about establishing a "coexistence" system with cash and deposits, with design principles centered on three key points:
- "Harmless", ensuring no impact on existing financial stability
- "Coexistence", allowing people to retain payment choice
- "Promote innovation", stimulating more possibilities in the payment market
To this end, retail digital wallets will be categorized with different types and limits based on identity verification:
- Individual Named Wallet: After identity verification, with an initial balance limit of 100,000 yuan and a daily transaction limit of 100,000 yuan, with a lost and found function.
- Corporate Named Wallet: Designed for corporate use, with an initial balance limit of 5 million yuan and a daily transaction limit of 5 million yuan.
- Individual Unnamed Wallet: For domestic users, requiring mobile phone authentication, similar to physical cash where loss means unrecoverable, with a balance limit of 30,000 yuan and a daily transaction limit of 30,000 yuan.
- Foreign Unnamed Wallet: Requiring foreign mobile number authentication, with a balance limit of 30,000 yuan and a daily transaction limit of 30,000 yuan.
Notably, to prevent excessive fund outflow from the banking system, the retail digital New Taiwan Dollar will be "non-interest-bearing".
Wallet Basic Functions
- Payment Receipt: Users can set a custom alias for others to transfer money
- Transfer
- Automatic Deduction
- Deposit and Withdrawal to Bank: Free conversion between CBDC and cash or bank accounts
- Offline Payment: Currently planned offline payment function without internet, possibly with reservation payment, but with limited offline times and requiring periodic online synchronization of ledgers.
Central Bank Example: Programmable Functions
The most anticipated feature of the digital New Taiwan Dollar is its "programmability", which makes money not just a medium of exchange, but a tool for smart living. The central bank provided several application scenarios:
- Family Financial Education: Parents can set pocket money release cycles for their children's wallets, even restricting consumption purposes (such as prohibiting game point purchases), to cultivate financial literacy in the next generation.
- Government Efficiency Improvement: In the future, when distributing disaster relief funds or childcare subsidies, the government can directly transfer funds to citizens' digital wallets, avoiding complicated administrative procedures and queuing. The "Digital Hakka Voucher" to be launched in July integrates "funds + vouchers" for one-click payment, allowing merchants to quickly receive payments.
- Business Model Innovation: Enterprises can use smart contracts to automatically disburse project payments based on progress or design more precise merchant loyalty rewards that are automatically credited upon reaching targets, reducing operational costs.
Balance of Privacy and Security
Regarding the public's most concerned personal data issue, the Central Bank has clearly drawn a line: all personal identity information will be managed by front-line banks or payment providers according to the Personal Information Protection Act, while the central bank platform itself will only retain encrypted or hash-processed "de-identified" transaction records.
In other words, the central bank only knows that "this transaction exists" but does not know "who is transacting with whom". Only when meeting legal procedures can judicial units legally retrieve data.
Wholesale CBDC
The central bank has already collaborated with six banks to complete a "tokenized cash flow platform" trial, successfully verifying applications such as interbank clearing and securities delivery versus payment (DVP) using wholesale CBDC, ensuring consistency and stability of value in retail and wholesale systems.
Despite the clear CBDC roadmap, the central bank still emphasizes that there is currently no formal issuance timeline. The public hearing phase this year has ended, and the forum schedule is from 7/2 to 8/26. Interested parties can register on the official website.
Kernel Comment: Anonymous Wallet May Still Be "Identified"
Kernel lawyer Lin Hong-yu, who has long followed cryptocurrencies, published a Facebook post after participating in the public hearing titled "Digital New Taiwan Dollar: Do You Think It's Cash, But Actually a National Monitoring App?" to highlight the regulatory intensity of the digital New Taiwan dollar.
Recently, seeing the retail application and planning of "Digital New Taiwan Dollar", I was shocked while reading, feeling like I had crossed into the WeChat Pay metaverse.
The Digital New Taiwan Dollar is a "retail CBDC" that sounds convenient: no need to carry physical cash, no worry about change, guaranteed by the state, usable online and offline - seemingly invincible, just like "Cash+"
But the side effects of Cash+ might be more than imagined.
Issue One: The Whole World Isn't Doing This, Are We Upgrading Alone?
Currently, China is mainly promoting retail CBDC, perfectly complementing its social credit system; in democratic countries, the only CBDC-issuing Nigeria (eNaira)? An IMF report directly refutes: 98.5% of accounts have never been used.
As for the United States, the House passed the "Anti-Surveillance CBDC Act" last May, and Trump even signed an executive order directly blocking CBDC, turning to support "USD stablecoin" and bypassing the Federal Reserve.
What about Taiwan? During the Digital New Taiwan Dollar public hearing, "anonymous wallet" was discussed, but looking closely - binding to a unique mobile phone, only one wallet allowed, OTP verification... this is called "wallet clearly recorded".
Issue Two: Privacy is a Cloud, Personal Information is a Lamb?
In the future, when you buy coffee or condoms with Digital New Taiwan Dollar, where will the transaction records be? The answer: with electronic payment providers, banks, and in the central bank's de-identified database.
When Alipay leaked 4 billion personal data records in China, are we really prepared to bear this "digital cash personal information landmine"?
Issue Three: Pocket National Tracker
A key feature of retail CBDC is "programmability", meaning the government not only knows how much and where you spend, but can also directly "set how you spend".
During e-CNY testing in China, digital red packets with "limited usage period, specific product restrictions" appeared. Imagine if the government directly limits you to spending only at cooperative convenience stores, bans tobacco and alcohol, or "specifies consumption purposes" for policy reasons - is this still "digital cash"?
CBDC is not digital cash, but a national tracker in our pocket (Beta version).
Short Comment
In actual usage, the form of retail CBDC is actually very similar to current popular Taiwanese electronic payment services like "LinePay" and "JKO Pay" with small cash payment and storage functions. Basically, just modifying the electronic payment law could achieve retail CBDC functionality, and public participation
