Taiwan joins growing list of countries developing CBDCs
Plans are in place to roll out a Taiwanese Central Bank Digital Currency, but concerns over privacy and abuse of power remain.
Taiwan’s central bank is working on developing a central bank digital currency (CBDC) but does not have a clear timeline for when it will be ready for public release, Reuters reported, citing the regulator’s governor, Yang Chin-long.
CBDC pilot is already well underway
The central bank disclosed that a pilot scheme involving the use of a digital wallet for payments had been in operation for the past two years. Yang called this a “closed loop environment” for testing the program under simulated conditions.
To complete the project, Yang specified meeting three specific challenges: communicating the idea with the general public and convincing them of its merits, building a stable system, and developing the legal framework for its use.
However, given the scale of the task at hand, Yang further commented that completing these objectives may take at least two years. And in that time, the central bank would need to re-evaluate its position, especially as locals tend to favor using cash.
“We still have to push forward. After all, most of the young people in the future will use mobile phones, so we have to think about the next generation.”
Still a divisive topic
Despite the trend towards CBDCs, several objections remain unanswered, including the role of retail banks in a CBDC economy, cybersecurity threats, the cost of implementation, and most pressing of all, concerns over privacy.
An article by Pantera, dated July 2021, takes the privacy angle a step further by calling CBDCs a “cyberpunk dystopian nightmare.” In particular, the article posited that transactions would be recorded and monitored. Meaning that the pieces would be in place to censor “enemies of the state.”
“It is about control, censorship, surveillance, and restriction of financial activity.”
The question is, especially considering the actions of certain governments during the health crisis, can we trust authorities not to abuse the power bestowed by a CBDC system?
According to the Atlantic Council, ten countries have launched a CBDC, and fifteen are in the pilot stages of one. A combined total of sixty-seven are either researching or actively developing a CBDC project.