Cody McGrath 
Chin-long Yang, governor of the Central Bank of the Republic of China (Taiwan), reportedly suggested a no-interest design for the nation’s central bank digital currency, or CBDC pilot.
Yang provided an explanation for the choice, stating that a CBDC that offers interest on digital asset deposits would probably take the place of fiat New Taiwan dollar (NT$) deposits in banks. Yang said that as soon as the banks’ available deposits drop, the cost of financing will rise in tandem, raising the cost of borrowing for customers.
Yang also cautioned that, in times of financial instability, even interest-free CBDCs might trigger “digital bank runs” and swiftly turn into a liquidity crisis for financial institutions. But even so, the country’s governor of the central bank noticed a rise in demand for electronic payment methods recently:
“The ratio of electronic payments as a % of all payments in Taiwan has risen from 40% in 2017 to 60% in Q1 2022. Therefore, there is the possibility of greater demand in the populace for a CBDC that provides a safe, trusted, no-commission, no credit risk and no liquidity risk form of digital payment solution.”
The second phase of Taiwan’s CBDC pilot program is presently underway, and five selected Taiwanese banks are receiving the CBDC for distribution to consumers.
The central bank will go on to the following steps based on the results of the pilot program. The CBDC’s distributed ledger technology, however, has already been shown in experiments to be unable to manage high frequency, high volume customer transactions. The payment solution’s lost functionality in the event of power outages is another cause for concern.