Advertisement
On Wednesday, according to a report by the local news site, Chin-long Yang, governor of the People's Bank of China (Taiwan), proposed the design of the bank's own interest-free digital currency, also known as CBDC. Explaining the decision, he said a CBDC that pays interest on digital bank deposits could be an alternative to new Taiwanese dollar deposits. Bank deposits are reduced, which can lead to an increase in financial costs and an increase in consumer borrowing costs.
CBDC design
However, interest-free CBDCs can still occur in a "technical banking run" situation in a certain time of financial uncertainty. This can cause financial institutions to quickly fall into a spiral of liquidity crisis. But he has also noticed a growing demand for electronic bar solutions in recent years.
"Taiwan's e-payment rate has increased from 40% to 60% in Q1 2022. It can be seen that, it is very likely that people will have greater demand for a CBDC that provides a safe, reliable, interest-free service and especially without credit and liquidity risks. "
Taiwan is currently in the second phase of a pilot program for CBDC, the central bank will provide CBDCs to Taiwanese banks selected for distribution to consumers. Based on the results of the pilot, Taiwan's central bank will make further decisions.
However, in tests, it has been determined that the distributed technology ledger in CBDC cannot handle consumer transactions with high frequency and large volumes. This may be a point of concern that the function of the payment solution will be lost in the event of a power outage.
>> See also: The easiest Coin Ex Registration Guide to understand
—
Telegram: https://t.me/+XqnDmxy-bz0wMTE1
Group: https://www.facebook.com/groups/655607162536305
Fanpage: https://www.facebook.com/WikiBinancecom
Twitter: https://twitter.com/wikibinancevn