“RWA tokenization and CBDC are the keys to transformation”

On the 7th, Deputy Governor of the Central Bank of Taiwan, Mei-Li Zhu, advocated “Banking 4.0” and talked about the benefits of central bank digital currency (CBDC) and real asset (RWA) tokenization as part of this.

Zhu said the financial industry is currently entering a new era of Banking 4.0, which is defined by the phrase “Financial Services Are Everywhere.”

He went on to say that Banking 4.0 means that customers do not need banks, but financial services (banking) that are integrated into their daily lives anytime and anywhere. Banks also face challenges from digital transformation.

Against this backdrop, he argued that tokenized digital assets and CBDCs may be the key to driving innovation in monetary payment methods.

Real asset tokenization is the tokenization of traditional assets such as deposits, stocks, bonds, and real estate, and is an area where the financial industry is currently showing interest in developing this area.

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Mr. Zhu said that the amount of investment in RWA tokenization-related activities has been increasing rapidly, from about 116 billion yen (about $800 million) at the beginning of the year to about 828 billion yen ($5.7 billion) in October. It has been pointed out that the number has increased to a similar level.

He explained that asset tokenization allows assets such as stocks and real estate to be divided into smaller units and sold, making it possible to invest small amounts and allowing more investors to participate.

In addition, by building financial products using various smart contracts, it will be possible to invest in products that combine the management of multiple assets.

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Concept of liquidating tokenized assets with CBDC

Mr. Zhu also mentioned a study by the Bank for International Settlements and said that future monetary systems will need to support tokenized assets, considering things like smart contract compatibility.

It said that central banks can issue CBDCs, integrate tokenized assets with the CBDC platform, and provide final payment services.

The idea is to create a joint ledger to integrate CBDCs and real-world asset tokens into the same programmable platform, with the CBDC also responsible for ultimately liquidating assets.

According to Zhu, Taiwan’s central bank has completed a “technical feasibility study on wholesale CBDC” and a “general CBDC demonstration experiment plan,” and is currently making improvements to the platform.

In the future, we plan to conduct an awareness survey among the public, government agencies, and industry and academia regarding aspects such as demand, risks, design, and supervision of CBDC, and will hold discussions based on the survey results. The company has not yet decided on the introduction of CBDC and is currently at the stage of careful consideration.

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