中央銀行發行法定數位通貨之研究評估 - 政大學術集成

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(1)國立政治大學科技管理與智慧財產研究所碩士學位論文. 立. 政治大. ‧ 國. 學. 中央銀行發行法定數位通貨之研究評估. ‧. Evaluating the Issuance of Central Bank Digital Currency (CBDC). n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. 指導教授：吳豐祥博士、黃敬群、臧正運博士研究生：袁子琁撰. 中華民國. 109 年 2 月. DOI:10.6814/NCCU202000382.

(2) Abstract Digitalization is shifting paradigms, reshaping the understanding of profitable business models and propelling a new form of currency. The existing orders and regulations are facing challenges with the emergence of cryptocurrency and electronic payments. In order to ensure financial stability and inclusion, central banks and other international regulators are compelled to embark on the exploration of novel financial technologies (Fintech) -- such as the issuance of central bank digital currency (CBDC). After clarifying the definition and possible forms of a CBDC, current research concentrates on potential impacts on economic equilibrium, monetary policy, and financial system; otherwise, related explorations are peripheral to technical requirements with legallycompliant basis when it comes to issuing a CBDC. However, most of the discussions focus on financial ecosystem and exclude the opinions from outsiders. Therefore, the research framework, based on the technology assessment (TA) concept but adjust to the characteristics of Fintech, intends to evaluate as diverse aspects of issuing a CBDC as possible, and provide some insights for policy makers such as a central bank according to the results of multiple interviews with key stakeholders.. 立. 政治大. ‧. ‧ 國. 學. This study follows the notion of qualitative research methods. Six interviewees were selected from domestic academics, local technical providers with international business and multinational banking Taiwan branch, but the only oddity took place when it comes to the monetary regulator: Team members of Project Stella at ECB accepted interview invitations to share their opinions on the five-year CBDC developments from the European perspective. The key findings of this research include: (i) “Technological uncertainties” as well as the “complexities of evaluation and implementation” deem likely to present challenges in CBDC issuance; (ii) The aspects of issuing a CBDC may encompass an EPSILON framework, which includes economics (macroeconomics, microeconomics, and financial system), politics, society, international relations (international monetary system and international politics), laws, organizations and others hereto aforementioned (environment and ethics); (iii) For policymakers, a better pathway would be: Begin with a known way, such as wholesale applications, and gradually extend to retail scenarios. With incremental adoption, the authorities will have capacity of exploring possible pathways as well as planning appropriate policies based on the previous experiences.. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Keywords: Central Bank Digital Currency (CBDC), Technology Assessment (TA), Distributed Ledger Technologies (DLTs), Taiwan CBDC, e-money. 2. DOI:10.6814/NCCU202000382.

(3) 摘要數位化的風行不僅帶來典範轉移、重新塑造可獲利之商業模型，亦促使新型態貨幣發行。在加密貨幣及電子支付蔚為風潮之際，既存秩序與規範均面臨嚴峻挑戰，而各國中央銀行及國際金融監理機構為確保金融穩定（Financial Stability）與普惠金融（Financial Inclusion），紛紛投入新興金融科技（Fintech）研究，其中「中央銀行數位通貨（CBDC）」發行之討論備受矚目。在釐清定義及可能發行形式後，學界開始探索發行中央銀行數位通貨對總經平衡（Equilibrium）、貨幣政策及整體金融體系影響層面及其程度，此外，亦有不少報告圍繞在技術規範如何對應現有法規之討論。然而，目前多數研究仍排除外界參與，將範疇限縮在金融生態系內部。因此，本研究借用科技評估（TA）的學理並結合金融特性提出一個整合性的架構，試圖將發行 CBDC 之可能面向納入考量，透過一系列關鍵參與者的訪談提供包括央行的政策制定者相關建議。. 政治大. 本研究採用質性研究取向，受訪人分別來自國內學術界、本土技術供應商、外商銀行臺灣分行，以及金融監管者：幾位任職歐洲央行（ECB）並實際參與 Stella 專案的小組成員暨組長。本研究所得到的初步結論包括：(1) 「科技不確定性」及「評估及執行之複雜度」是目前發行 CBDC 面臨的主要困難；(2) 發行 CBDC 所涉及面向可以 EPSILON 架構分析之，包括經濟（總經、個經、金融體系）、政治、社會、國際關係（包括國際貨幣體系及國際政治）、法律、組織、及其他（例如：環境、倫理）；(3) 從政策制定者觀點來說，較合適的發行路徑可能是先「從已知的（如：批發型 CBDC）著手，再進行延伸（如：零售型 CBDC）」。藉由循序漸進評估規劃，相關當局得以先透過階段性經驗累積必要知識（Know-hows），進而探索可能發展方向及制定適當政策。. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. i Un. v. 關鍵字：中央銀行數位通貨、科技評估、分散式帳本技術、臺灣 CBDC、數位貨幣. Ch. engchi. DOI:10.6814/NCCU202000382.

(4) DOI:10.6814/NCCU202000382.

(5) Table of Contents 1. Introduction 2. Literature Review 2.1. Technology Assessment (TA) 2.2. Financial Technology (Fintech) 2.3. Central Bank Digital Currency (CBDC) 2.4. CBDC Issuance Mechanism 2.5. Summary 3. Research Approaches and Methods 4. Evaluating the Issuance of Central Bank Digital Currency (CBDC) 4.1. Monetary Regulator: European Central Bank (ECB) 4.2. Financial Intermediaries: Commercial Banks 4.3. Academic & Research Institutes 4.4. Technical Providers 4.4.1. Blockchain Startup CEO 4.4.2. Fintech Startup Scientist 4.4.3. Director at Information Technology (IT) Industry 4.4.4. Blockchain Startup Engineer 4.5. Summary of Field Reports 5. Results and Analysis 5.1. Motivation 5.2. Impacts 5.3. Challenges 5.4. Findings and Analysis 5.4.1. Compound Issuing Motivations 5.4.2. Uncertainties and Complexities in Evaluation Process 5.4.3. Evaluating the Issuance of a CBDC 5.4.4. Insights of Issuing a CBDC 6. Conclusion 7. Acknowledgements 8. Reference. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i. i Un. v. 1 5 5 7 9 15 17 20 22 22 22 23 24 24 25 26 26 27 28 28 29 32 34 34 36 38 45 46 48 49. DOI:10.6814/NCCU202000382.

(6) List of Figures Figure 1 The Money Flower ............................................................................ 3 Figure 2 The CBDC Issuance Mechanism ....................................................... 15 Figure 3 Mechanism of Cross-border Payment and Settlement .......................... 17 Figure 4 Research Framework........................................................................ 20 Figure 5 Reasons for issuing a CBDC ............................................................. 29 Figure 6 Impacts of issuing a wholesale CBDC ............................................... 30 Figure 7 Impacts of issuing a retail CBDC ..................................................... 31 Figure 8 Level of Impacts with CBDC issuance ............................................... 32 Figure 9 Challenges for issuing a CBDC ......................................................... 33 Figure 10 Specific challenges for issuing a retail CBDC ................................... 33 Figure 11 Evaluation process of issuing a retail CBDC ..................................... 37 Figure 12 Specific challenges for issuing a retail CBDC .................................. 37 Figure 13 Evaluation framework of issuing a CBDC ........................................ 39. 立. 政List of治Tables大. ‧. ‧ 國. 學. Table 1 Attributes of Central Bank Money ...................................................... 11 Table 2 Global CBDC Prototypes ................................................................... 14 Table 3 Compound Issuing Motivations .......................................................... 36 Table 4 Key Impacts of CBDC IssuenceIssuance: EPSILON ........................... 44. n. er. io. sit. y. Nat. al. Ch. engchi. ii. i Un. v. DOI:10.6814/NCCU202000382.

(7) Acronyms and Abbreviations Academic Terms Constructive Technology Assessment (CTA) Health Technology Assessment (HTA) Information Technology Assessment and Adoption (ITAA) Interactive Technology Assessment (ITA) Netherlands Organisation of Technology Assessment (NOTA, now is renamed as Rathenau Institute) Office of Technology Assessment (OTA) Organization for Economic Cooperation and Development (OECD) Participatory Technology Assessment (pTA) Real-Time Technology Assessment (real-time TA) Social, Technological and Environmental Pathways to Sustainability Centre (STEPS Centre) Technology Assessment (TA) Technology Assessment and Environmental Impact Analysis (TA/EIA). 政治大. Financial Term Anti-Money Laundering (AML) Automated Teller Machine (ATM) Bank for International Settlements (BIS) Bank of Canada (BoC) Bank of England (BoE) Bank of Japan (BoJ) Central Counterparties (CCPs) Central Securities Depositories (CSDs) Committee on Payments and Market Infrastructures (CPMI) Correspondent Banking Coordination Group (CBCG) Customer Relationship Management (CRM) Delivery Versus Payment (DVP) Digital Currency Electronic Payment (DC/EP) Eastern Caribbean Central Bank (ECCB) Enterprise Resource Planning (ERP) European Central Bank (ECB) Financial Action Task Force (FATF) Financial Stability Board (FSB) Financial Supervisory Commission (FSC) Inter-America Development Bank (IDB) International Monetary Fund (IMF) International Organization of Securities Commissions (IOSCO) Know-Your-Customer (KYC) Liquidity Saving Mechanisms (LSM) Markets Committee (MC) Monetary Authority of Singapore (MAS) National Association of Securities Dealers Automated Quotations (Nasdaq) Principles for Financial Market Infrastructures (PFMI) Securities Settlement Systems (SSSs) Society for Worldwide Interbank Financial Telecommunication (SWIFT) South African Reserve Bank (SARB). 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. iii. i Un. v. DOI:10.6814/NCCU202000382.

(8) World Bank (WB) Technological Term Artificial Intelligence (AI) Chain of Responsibility (COR) Distributed Ledger Technologies (DLTs) Financial Technology (Fintech) Near-Field Communication (NFC) Peer-to-Peer (P2P) Proof of Concept (PoC) Research and Development (R&D) Trusted Computing Base (TCB) Zero Knowledge Proof (ZKP). 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. iv. i Un. v. DOI:10.6814/NCCU202000382.

(9) 1. Introduction Digitalization is shifting paradigm, reshaping the understanding of profitable business models and propelling a new form of currency. For decades, dramatic changes occurring with technology developments have evolved both devices and infrastructure in retail payments, from credit cards, near-field communication (NFC) cards to digital wallets, accelerating the realization of a cashless society. Meanwhile, multiple private cryptocurrencies inspired by Satoshi Nakamoto’s paper “Bitcoin: A Peer-to-Peer (P2P) Electronic Cash System” in 2008 has shed light on decentralized paperless payments.1 The emergence of the distributed ledger technologies (DLTs), referring to the protocols and networks using cryptography to synchronize access, validation and record in an immutable manner by specific consensus mechanism without fair third-party, admittedly take risks to current centralized mechanism such as the payment systems, the central securities depositories (CSDs),2 the securities settlement systems (SSSs),3 and the central counterparties (CCPs).4. 立. 政治大. ‧ 國. 學. ‧. In fact, financial institutes such as the Bank for International Settlements (BIS), the Financial Stability Board (FSB) or the International Monetary Fund (IMF) proposed a couple of universal principles or policies regarding Know-Your-Customer (KYC), 5 Anti-Money Laundering (AML), sanctions screening and regulating macro-prudential systematic risks.6 Particularly after the financial crisis of 2008, the risk management in global financial markets is recognized in conjunction with the proposal of the Basel III as well as the Principles for Financial Market Infrastructures (PFMI) released by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) in 2012. In addition, concrete monitor mechanism is established: The Financial Action Task Force (FATF) proposed measures of AML/CFT respectively in 2014 and in 2015, while the Correspondent Banking Coordination Group (CBCG) has paid more attentions on delivering action plans, providing high-level coordination and building early alert mechanism since 2016. With the globalization, it is crucial to take increasing cross-border transactions and settlements into consideration; thus, the ISO 20022 compliance and standard MT messaging format (e.g. SWIFT) have been introduced to the global financial markets.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. However, most of the regulations are designed for large value transactions rather than microtransactions in the electronic payment ecosystem. Furthermore, the regulatory 1. Satoshi Nakamoto. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Last retrieved from https://bitcoin.org/bitcoin.pdf 2 The CSDs refers to institutions that holds financial instruments, such as bonds, equities, mutual funds and other market instruments. 3 The SSSs are critical components which utilize cross-border trades and settlements with the intermediating cash flow between borrowers and lenders. 4. The CCPs is the intermediaries which represent buyers or sellers to make transactions.. 5. According to Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1), KYC process refers to the collection of (1) the customer’s full name; (2) the customer’s date of birth; and (3) the customer’s residential address. 6 For example, for example liquidity coverage ratio (LCR), net stable funding ratio (NSFR). and leverage ratio. 1. DOI:10.6814/NCCU202000382.

(10) complexity and fragmentation in post-crisis era deteriorate the situation. In order to ensure the financial stability and inclusion, central banks and other international regulators are compelled to embark on the exploration of novel financial technologies (Fintech) -- such as the issuance of central bank digital currency (CBDC). A CBDC was initially defined as “an electronic form of central bank money that can be exchanged in a decentralized manner known as peer-to-peer” in 2017 BIS report (Figure 1). 7 The clustering factors include the issuer (central banks or private institutions), the form (physical or digital), the accessibility (universal or limited) and the selected technology (centralized or decentralized), which are adopted by the CPMI and the Markets Committee (MC) in the next year.8 Another white paper at 2019 World Economic Forum described a CBDC as a new central-bank-issued money which is “redeemable for its domestic currency and often simultaneously removing the equivalent amount of currency from the money supply” based on especially but not limited to DLTs. 9 Also, according to different types of end-users, a CBDC can be further distinguished as a widely consumer-facing retail version and a restricted-access wholesale token for interbank payments or settlements.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 7. Ch. engchi. i n U. v. BIS. (2017). Central Bank Cryptocurrencies, BIS Quarterly Review.. 8. Committee on Payments and Market Infrastructures Markets Committee. (2018). Central Bank Digital Currencies. Last retrieved from https://www.bis.org/cpmi/publ/d174.pdf 9 World Economic Forum. (2019). Central Banks and Distributed Ledger Technology: How are Central Banks Exploring Blockchain Today?. 2. DOI:10.6814/NCCU202000382.

(11) 立. 政治大. ‧. ‧ 國. 學 y. Nat. Figure 1 The Money Flower. io. sit. Source: “Central bank cryptocurrencies,” BIS Quarterly Review, September 2017, p55-70. n. al. er. In fact, central banks and private banks already issue digital currency, namely reserves and deposit accounts. 10 Plus, the third payment service providers, either electronic payments or plastic cards become more and more popular. Still, a CBDC differs from current mechanism with at least two characteristics described by the Bank of England (BoE): (i) Can be broadly accessed than reserves; and (ii) has more potentials in the retail scenario than cash.11 That means a CBDC is expected to be “a widely accessible digital form of fiat money that could be legal tender.”12 Concisely, a CBDC is a liability of the central bank without outsourcing step, and the function is supposed to resemble the cash13. Ch. engchi. i n U. v. Ideally a Fintech breakthrough could improve payments safety and efficiency, enhance financial stability and support monetary policy implementation. However, commercial banks inevitably question whether such innovations may destroy their fundamental business model once the direct interaction between end-users and a central bank is built, not to mention the doubts about the impacts on the monetary policy from central banks. With the large-scale circulation of a fiat currency, any slight mistake resulting from 10. Federal Reserve Bank of St. Louis. (2018). Blockchain, Cryptocurrencies and Central Banks.. 11. The Institute and Faculty of Actuaries (IFoA). (2019). Understanding Central Bank Digital Currencies (CBDC). Last retrieved from https://www.actuaries.org.uk/system/files/field/document/Understanding%20CBDCs%20Final%20%20disc.pdf (February 25 2020) 12 IMF. (2018). Casting Light on Central Bank Digital Currencies. 13. IMF. (2019). Perspective on Central Bank Digital Currency (CBDC).. 3. DOI:10.6814/NCCU202000382.

(12) either the internet latency or cyber-attack in the transaction process may jeopardize public confidence in the government.14 In particular, the essences of global financial market lie in trust-building and risk management.15 Furthermore, it is doubtful whether every nation is eligible for issuing a CBDC and what social environment is fitting for the innovative policy. To answer these concerns, it is critical to investigate different tools and how they can be applied to evaluate the introduction of new technology to the financial system, including clarification for stakeholders, potential impacts and possible transformation. Considering its early-stage development, the evaluation of the CBDC issuance is based on the theory of technology assessment (TA), instead of technology policy assessment. Therefore, this thesis raises three research questions: (1) What are the potential challenges for an innovation policy such as the CBDC issuance? (2) How can a policy maker identify the impactful aspects and conduct an overall evaluation when it comes to the CBDC issuance? (3) And most importantly, what are the possible pathway for policymakers, in particular a central bank, to select? To answer the questions, this research will propose a framework on the basis of technology assessment (TA) but adjust to the characteristics of a financial system. Later on, several interviews with multiple key stakeholders will be conducted in order to outline an overall evaluation framework for the CBDC issuance from the perspectives of a central bank. Next, Chapter 2 consists of some previous work concerning the TA, the Fintech and the CBDC. After the research gap is elaborated. a research framework is formed in Chapter 3. In the following, a couple of qualitative interviews with several major stakeholders, such as the central bank, commercial banks, academics and technical providers, would be addressed in Chapter 4, followed by some analysis and key findings in Chapter 5. In the end of the induction step, Chapter 6 will come to some conclusions and provide concrete suggestions to monetary regulators and future works.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 14. Zhang, T., Atlanta Federal Reserve Bank Conference, & IMF. (2018). Digitization of Money and Finance: Challenges and Opportunities. 15 The risks include systematic risks, legal risks, credit risks, liquidity risks, customer risks, business risks and operation risks.. 4. DOI:10.6814/NCCU202000382.

(13) 2. Literature Review 2.1. Technology Assessment (TA) The term, “technology assessment,” (TA), first mentioned in 1966, indicates the process of neutrally discovering the consequence of the use of technology for the legislature and policy makers. 16 Hence, earlier research mainly focused on the sophisticated methods on a firm statistical or mathematical basis,17 which deemed to be scienceoriented as well as value-neutral. The establishment of the US Office of Technology Assessment (OTA) in 1972 marked the beginning of the legacy of the TA until its demise in 1995. 18 Aside from the explorations of both quantitative and qualitative methods, the extension of TA applications to products and consumer goods, infrastructure and communication, production technology, and global or transnational technologies, broadened the definition of TA from “systematic analysis of alternative options and its final decision-making (OECD 1971)” to “the combination of the techniques (e.g. human, economic, social or environmental impacts accompanying innovative technologies) and the organization belonging to it.”19 Some specific fields, such as the Information Technology Assessment and Adoption (ITAA, 1985), were underlined in 1980s.. 立. 政治大. ‧. ‧ 國. 學. y. Nat. sit. n. al. er. io. However, this type of TA was criticized for several reasons. Firstly, contestable value judgements accompanying those implicit or non-technical framing assumptions made the TA lose its objectivity, since the fundamental assumptions, for example the clarification of problems, the scope of appraisal, and the types of effects for evaluation, were barely recognized (Wynne, 1975; Sclove, 2010). Secondly, the failure to deliver real-time results was another weakness of the traditional TA as the production period for one report normally took roughly 24 months. Thirdly, the dynamic socio-technical interactions tended to be ignored in such models, not to mention the framework with a strong bias towards economic, environmental and health implications of technology compared to the ethical, social, legal and other impacts. More essentially, the conceptions of the technologies themselves were changing. The conservative arguments believed the value neutrality of and the autonomy of technology,2021 which implied that technology was self-determinative in accordance to its laws and supported no social or political values, but both of the features discouraged democratic. Ch. engchi. i n U. v. 16. Dylander, B. (1980). Technology Assessment - As Science and as a Tool for Policy, Acta Sociologica Vol. 23, No. 4, Technology and Society, 217-237. 17 According to Brook (1976), the ideal function of TA is that “it should forecast, at least on a probabilistic basis, the full spectrum of possible consequences of technological advance, leaving to the political process the actual choice among the alternative policies in the light of the best available knowledge of their likely consequences.” 18 Office of Technology Assessment Act (1972). Last retrieved from https://ota.fas.org/technology_assessment_and_congress/otaact/ (February 25 2020) 19 Teknologistyrelsen. (1980). Teknologivurdering i Danmark - betænkning afgivet af et udvalg under Teknologirådet, København: Teknologistyrelsen. 20. Dickson, D. (1974). Alternative Technology and the Politics of Technical Change (New York: University Books). 21 Oberdiek, H. (1986). Technology: Autonomous Or Neutral (Chicago: The University of Chicago Press). Last retrieved from https://www.ratical.org/ratville/AoS/WhaleAndReactor.pdf. 5. DOI:10.6814/NCCU202000382.

(14) participation in the process of policy-making. 22 Yet, a series of discussions on the possibilities of systematic innovation shed light on a new conception of technology,23 hence the transformation of whether technology assessment or technology policy inevitably took place.24 Later on, inspired by the spirit of the public participation and limited to professional risk evaluation,25 the meaning of TA changed. The new concept of TA emphasizes equal roles for all participants, includes feedback from the stakeholders to the decisionmaking procedure, and describes the technology evaluation as a value-loaded, partially normative and discourse outcome. In other words, the TA abandoned the principle of the value neutrality, but depending on economic demands or societal expectations. Meanwhile, a parallel wave of environmental protection gradually merged with the technology assessment movement,26 creating an environmental and integrated TA after 1990s. Interactive technology assessment (ITA), constructive technology assessment (CTA), 27 participatory technology assessment (pTA) and real-time technology assessment (real-time TA) have sequentially envisioned in 1990s in pursuit of broadening out the inputs to and opening up the outputs from the TA. For example, CTA (Rip et al., 1995) proposed by Netherlands Organisation of Technology Assessment (NOTA, now is renamed as Rathenau Institute) is aimed at organizing a diverse panel discussion which consists of experts and citizens in order to explore more possibilities of new technologies.28 Denmark developed pTA (Klüver et al., 2000) by extending the agents from outside to ensure the participation and the discursivity in belief of the value of consensus conferences during institutionalized technology assessment and the results are determined by a representative public opinion poll.2930 As for real-time TA (Guston and Sarewitz, 2002), the research framework intends to bridge the gap between scientific or technological achievements and the policy research by embedding the TA in the knowledge creation process. Basically, the new TA uses the approaches such as socio-technical mapping, analogical case studies, the. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 22. Inmaculada de Melo-Martín. (1998). Making babies : biomedical technologies, reproductive ethics, and public policy. 23 Ruud Smits, Jos Leyten, Pim Den Hertog. (1995). Technology assessment and technology policy in Europe: New concepts, new goals, new infrastructures. Policy Sciences, 28, 271-299. 24 The attention had shifted from supply side to demand side since late 1970s, and concerned more about the interaction between researchers and TA-users, which was regarded as user-orientation. 25 Nelkin, D., and M. Pollak. (1979). Public participation in technological decisions: Reality or grand illusion? Technology Review 9, 55-64. Meanwhile, Participative policy making was first proposed by Toth in 1988 in “Policy exercises, procedures, and implementation.” 26 The National Environmental Policy Act (NEPA) came into force in 1969 and the development of Environmental Impact Analysis (EIA) moved on for a while. 27 A Rip, H van den Belt. (1986). Constructive Technology Assessment: Influencing Technological Development? Journal fur Entwicklungs-Politik, 3, 24-40. 28 Johan, & Arie. (1996). The Past and Future of Constructive Technology Assessment. 29. Denis Goulet. (1994). Participatory Technology Assessment: Institutions and methods. Technological Forecasting and Social Change, Volume 45 Issue 1, 47-61. 30. Simon Joss. (1998). Danish Consensus Conferences as a Model of Participatory Technology Assessment: An Impact Study of Consensus Conferences on Danish Parliament and Danish public Debate. Science and Public Policy, Volume 25, Issue 1, 2–22.. 6. DOI:10.6814/NCCU202000382.

(15) communication and early warning, and the evaluation with either retrospective or prospective analysis.31 Other types of new TAs encompass the interactive technology assessment (Loeber, 2004), the open-source technology assessment (Rejeski, 2005), the integrative participatory technology assessment (Hirakawa, 2010), and the “third generation of technology assessment” (Yoshizawa, 2010). In principle, the reasons of the adjustments in TA can correspond to the goal of “minimizing mismatches, wrong investments, and possible social conflict” proposed by the Organization for Economic Cooperation and Development (OECD). 32 Currently the ESRC STEPS (Social, Technological and Environmental Pathways to Sustainability) Centre further identifies specific potential domains for TA, including agriculture, health, energy/climate changes and emerging technologies, based on a couple of case study in developing countries.33 Moreover, the European Commission launched a legislative proposal on the health technology assessment (HTA) by 2018, 34 while the guidebook of Technology Assessment and Environmental Impact Analysis (TA/EIA) was released in 1980 to provide a firm academic framework as reference.35. 立. 政治大. ‧. ‧ 國. 學. sit. y. Nat. er. io. 2.2. Financial Technology (Fintech). Since the 2008 financial crisis, the notion of financial technology (Fintech) has turn into a new paradigm and is regarded as solutions to current issues of financial markets in the post-crisis era. 36 For instance, regulators in Asia managed to improve the regulation by overseeing Fintech. 37 Also, another report from World Bank (WB) believed that Fintech such as mobile money services, payment cards, and other applications is beneficial to the global financial inclusion.38 Firstly appeared in 1972 and parallelly proposed in early 1990s, 39 the term of Fintech, referring to the combination of finance and technology, was originally defined as “an acronym which stands for financial technology, combining bank expertise with modern management. n. al. Ch. engchi. i n U. v. 31. Guston, D. H., & Sarewitz, D. (2002). Real-time Technology Assessment, Technology in Society Volume 24, Issues 1–2, p93-109. Last retrieved from https://cspo.org/legacy/library/1104071235F63583901WV_lib_GustonSarewitzRe.pdf 32 Johan, & Arie. (1996). The Past and Future of Constructive Technology Assessment. 33 ESRC STEPS Centre. (2011). New Models of Technology Assessment for Development. Last retrieved from https://steps-centre.org/wp-content/uploads/Technology_Assessment.pdf 34 Health Technology Assessment by the European Commission. Last retrieved from https://ec.europa.eu/health/technology_assessment/overview_en (February 27 2020) 35. Porter, Rossini, Carpenter, Roper, Larson, Tiller, & J.s. (1980). Guidebook for Technology Assessment and Impact Analysis. 36 Asian Institute of International Financial Law. (1 April 2015). Regulating FinTech Innovation: A Balancing Act. Last retrieved from https://www.law.hku.hk/aiifl/regulating-fintech-innovation-a-balancingact-1-april-1230-130-pm/ (February 20 2020) 37 FinanceAsia. (September 4 2015). Asian regulators seek fintech balance. Last retrieved from https://www.financeasia.com/article/asian-regulators-seek-fintech-balance/401588 (February 20 2020) 38. Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, Saniya Ansar and Jake Hess. (2018). The Global Findex Database 2017: Measuring financial inclusion and the fintech revolution. 39 Patrick Schueffel (2016). Taming the Beast: A Scientific Definition of Fintech. Journal of Innovation Management (Switzerland: Hochschule für Wirtschaft Fribourg), 36.. 7. DOI:10.6814/NCCU202000382.

(16) science techniques and the computer.” 40 Currently, with the emergence of diverse applications, Fintech is re-defined as “a new financial industry that applies technology to improve financial activities” to cover broader scopes.41 In fact, the history of the financial technology and the innovation has lasted for centuries. 1838 marked the first time telegraph was applied to commercial use, and in the late 19th century (1866) a transatlantic cable was established by the Atlantic Telegraph Company as the infrastructure for the first wave of financial globalization. Later on, the first credit card was invented by Diner’s Club Inc in 1950 and eight years later the American Express Company adopted the new type of payment. In 1960, the Quotron first offered stock market quotes on an electronic screen without traditional paperwork. After a while, the invention of telex network which replaced telegraph in 1966 shed light on global communication in the financial information and transaction. Exactly the next year (1967), a machine readable cheques marked with carbon-14 and with extra 6-digit pin for protection was introduced by Barclays Bank, which was afterwards well-known as automated teller machine (ATM). 42 Another unprecedented examination of the technology succeeded in 1971: National Association of Securities Dealers Automated Quotations (Nasdaq), the first electronic stock market, came out. The proposal of the online banking (e.g. Bloomberg terminal) in 1980s and the idea of e-commerce in 1990s, eventually meet incredible achievements with the maturity of Internet infrastructure.43 Moreover, the keen competition in financial markets also compelled internal innovations, such as enterprise resource planning (ERP) and customer relationship management (CRM). The spread of the Internet and smartphones admittedly does impact the original mindsets of the financial technology.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. i n U. v. From a quick review of the financial technology history, the trends of the automation and the digitalization can be easily identified, which implies the human intervention and the paperwork are gradually decreasing. Unexpectedly, the Fintech evolution was accelerated after the 2008 global meltdown. First, this financial crisis unveiled that the entire ecosystem was exposed to the threats resulting from the regulatory complexity and fragmentation. For the better risk management, the regulating transparency and operation efficiency came into the discussion to ensure the legal compliance obligations.44 Second, consumers gradually lose their confidence of banking system with the concerns on “Too Big to Fall (TBTF).”45 Consequently, users seem likely to embrace financial service provided by tech firms. Therefore, the emergence of the Bitcoin spark the public interest because the DLT-based cryptocurrency features the encrypted digital form, P2P transactions, and the machine-to-machine (M2M). engchi. 40. Bettinger. (1972). Fintech: A Series of 40 Time Shared Models Used at Manufacturers Hanover Trust Company, p62.. 41. Patrick Schueffel. (2016). Taming the Beast: A Scientific Definition of Fintech.. 42. History. (April 20 2010). Automated Teller Machines. Last retrieved from https://www.history.com/topics/inventions/automated-teller-machines (February 17 2020) 43 David C. Chou and Amy Y. Chou (2000). The E-Commerce Revolution: A Guide to the Internet Revolution in Banking. Information Systems Management, 47-53. 44 Ferrari, B. (2016). FinTech Impact on Retail Banking – From a Universal Banking Model to Banking Verticalization. 45 Forbes. (2015). Americans Trust Tech Firms More Than Banks For Finance. Last retrieved from https://www.forbes.com/sites/niallmccarthy/2015/06/24/americans-trust-tech-firms-more-than-banks-forfinance-infographic/#33fa36814e94 (March 16 2020). 8. DOI:10.6814/NCCU202000382.

(17) automation utilized by smart contracts, which implies the reduction of operation costs and the enhancement of efficiency. In addition, the anonymity, the traceability and the immutability of the DLTs further inspire several novel business models and applications, for example mobile payment, P2P lending platforms and online banking. Last but not least, to stabilize the financial market during global financial crisis, quantitative easing (QE) turned into a popular policy for the authorities to adopt in order to encourage lending and investment.46 However, the transmission of the QE policy depends on both the friction costs into the economy and the interaction with the incentive mechanism of banking system.47 The existence of the financial intermediation tends to reduce the benefits of money injection to the economy because of the offset in balance sheet. Hence, monetary regulators are urged to investigate novel solutions to enhancing the efficiency and improving monitoring, so the paradigm of Fintech indeed catches their attention. Admittedly, the authorities ponder what type of Fintech fits the requirements of transparency, trust-building, reliability as well as wide accessibility, and simultaneously utilizes their remaining control of coinage and seigniorage. The rising of cryptocurrency gives some hints to the financial regulators: The issuance of a digital fiat money may become the next step.. 立. 政治大. ‧ 國. 學. ‧. 2.3. Central Bank Digital Currency (CBDC). n. al. er. io. sit. y. Nat. The improvements of payment and circulation approaches are one of the focal points in financial innovation. Despite the early development of credit cards in 18th century, the proposal of an "Europay, Mastercard, and Visa (EMV)" standard and the emergence of e-commerce had urged the monetary regulators to evaluate the possibilities of paperless transaction since 1990s. 48 The paper “Electronic Money” in 1996 indicated that to ensure the value and reliability of privately minted money in an electronic economy, there were four technology issues addressed: The security for online payment, the authentication for users to verify, the anonymity in every single transaction and the denominations utilizing the small-value transaction.49 At that time, the terminology of digital money meant either smart card with microprocessor embedded or network money based upon computer networks (e.g. the Internet),50 although some discussions on digital tokens were emerging since late 1980s.51 However, not until the birth of Bitcoin, central banks believed the collaboration with private financial institutions was the optimal strategy of managing digital money. Such DLT-based tokens not merely allow anyone to issue their own cryptocurrency, but provide possible solutions to financial regulating and fragmentation. Monetary regulators have no choice but embark on the exploration of the CBDC issuance.. Ch. engchi. i n U. v. 46. Quantitative easing (QE) is a form of monetary policy conducted by a central bank to purchase government bonds or other securities to increase the money supply to stimulate domestic market. 47 BoE. (2016). The Macroeconomics of Central Bank Issued Digital Currencies. 48 "Europay, Mastercard, and Visa (EMV)" was a universal payment method on the basis of a technical standard for digital payment in 1994. 49 Flohr, U. (1996). Electronic money. Byte, Volume 21, Issue 6, 74-84. Retrieved from https://www.ncjrs.gov/App/Publications/abstract.aspx?ID=169679 50 Berentsen, A. (1998). Monetary Policy Implications of Digital Money. Kyklos, Vol. 51, 89-117. 51 David Chaum, Amos Fiat, Moni Naor. (1988). Untraceable Electronic Cash. Conference on the Theory and Application of Cryptography, 319-327.. 9. DOI:10.6814/NCCU202000382.

(18) Discussions concerning CBDC have drawn greater attention since 2014.52 In its early stages, people wondered the major differences and similarities between the traditional paper currency and a possible new form of the token-based fiat money.5354 In general, with a clearer definition of CBDC, the consensus has reached that CBDC can decrease the cost of issuing money and prevent crimes associated with anonymous cash, but still, there are a couple of debates on (1) what type of CBDC should be issued and its currency with paper money; (2) how a domestic or regional CBDC be used in other countries (cross-border payment or settlement); (3) if a retail CBDC should be interestbearing with the form of value-based or account-based CBDC; (4) how to control diverse risks of issuing a CBDC in financial systems, such as the operation risk, the credit risk, the liquidity risk and the default risk with DLT-based platforms; and (5) what future position of commercial banks would be transformed with the direct involvement of central banks to customers and merchants.. 政治大 To answer the concerns, several 立 central banks released a couple of reports as response. Particularly in “Central Bank Digital Currency: Motivations and Implications,” the 55. ‧. ‧ 國. 學. BoC proposed the concept of the benchmark CBDC and the interest-bearing CBDC (ICBDC), assessing their impacts on the monetary policy and the financial stability. The BoC believed that the benchmark CBDC itself seems to make insignificant changes on the seigniorage revenue, the banking system and the monetary policy, but the designs of anonymity and AML mechanism are likely to impact CBDC demand, which is highly relevant to the previous macroeconomic factors. In contrast, a CBDC with bearinginterest may increase financial volatility and eventually lead to a financial instability because of the banking competition with the issuance amount; nonetheless, an I-CBDC is likely to benefit the retail payments with benign contestability. Both of them deem not present a challenge to the wholesale system, such as the RTGS. Simultaneously, a comparison in the attributes of the central bank money, including reserves, bank notes and the benchmark CBDC, was made in the report.. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. 52. BoE (2014). The Economics of Digital Currencies, Quarterly Bulletin 2014 Q3. Last retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2499418 53 BoE (2014). Innovations in Payment Technologies and the Emergence of Digital Currencies, Quarterly Bulletin 2014 Q3. Last retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2499397 54 BoE (2016). Central Bank Digital Currency: the End of Monetary Policy as We Know it? Last retrieved from https://bankunderground.co.uk/2016/07/25/central-bank-digital-currency-the-end-of-monetary-policyas-we-know-it/ 55 BoC (2017). Central Bank Digital Currency: Motivations and Implications. https://www.bankofcanada.ca/wp-content/uploads/2017/11/sdp2017-16.pdf. 10. DOI:10.6814/NCCU202000382.

(19) Table 1 Attributes of Central Bank Money. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. BoC, Central Bank Digital Currency: Motivations and Implications, 2017, p12. 11. DOI:10.6814/NCCU202000382.

(20) Later on, the focus transferred to the potential participants and possible macroeconomic impacts of the CBDC issuance. For example, the Inter-American Development Bank (IDB) identifies the stakeholders participating in the CBDC issuing, Some mature research models were also applied to the novel field. 56 The BoE (2016) uses a monetary-financial DSGE model to clarify the possible impacts of CBDC on banks, households, financial investors, unions, the fiscal policy, the monetary policy, the equilibrium and the market clearing and shocks from the macroeconomic view. This model identifies multiple benefits, including reductions in the real interest rates, distortionary taxes, and monetary transaction costs, without significant costs. 57 The other article, from the viewpoint of monetary economics, believes an account-based and interesting-bearing CBDC satisfies the requirements of costless medium of exchange, secure store of value, and stable unit of account, and simultaneously reminds the policy makers of salient risks, including potential macroeconomic instability, loss of monetary control, systemic risks and susceptibility to severe downturns. 58 Meanwhile, global central banks and international financial regulators release massive reports as well as pilots relevant to the CBDC exploration, such as technical options, practical experiments, and technical requirements which correspond to the financial system implications with legal-compliant foundation.. 立. 政治大. ‧. ‧ 國. 學. n. al. er. io. sit. y. Nat. From more than 60 reports all over the world,59 it is notable that some projects have not only examined technical limitations but already taken legal compliance into consideration. So far, less than 5 projects focus on retail CBDC, such as Swedish ekrona and the large-scale test of the Eastern Caribbean Central Bank (ECCB),60 while major pilots emphasize on the wholesale applications, including the interbank payments, the cross-border money transfer and the delivery versus payment (DVP) mechanism. (Take Project Stella for instance.) The European Central Bank (ECB) and the Bank of Japan (BoJ) step by step explored the DLT potentials from conceptual designs to practical prototypes, successfully examining the liquidity saving mechanisms (LSM),61 DvP,62 and the synchronized cross-border payments.63 Started in 2016, Project Ubin implemented by the Monetary Authority of Singapore (MAS) and Project Jasper launched by the Bank of Canada (BoC) respectively shared similar testing stages to Project Stella, and jointly release a design paper “Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies” to prove the capacity of the DLT-. Ch. engchi. i n U. v. 56. IDB. (2016). Digital Central Bank Money and the Unbundling of the Banking Function.. 57. BoE. (2016). The Macroeconomics of Central Bank Issued Digital Currencies.. 58. Michael D. Bordo, Andrew T. Levin. (2017). Central Bank Digital Currency and the Future of Monetary Policy. 59 World Economic Forum. (2019). Central Bank/Macroeconomics CBDC and DLT Research List. Last retrieved from https://docs.google.com/document/d/1c8iGtoG7BkPriufnIPELEWvtZiNtouOyJp2IYjhAEY/edit# (February 20 2020) 60 Project e-krona by Sweden. Last retrieved from https://www.riksbank.se/en-gb/payments--cash/e-krona/ (February 20 2020) 61 ECB. (2017). Payment Systems: Liquidity Saving Mechanisms in a Distributed Ledger Environment. 62. BoJ. (2018). Securities Settlement System: Delivery-versus-Payment in a Distributed Ledger Environment.. 63. ECB. (2019). Synchronized Cross-border Payments.. 12. DOI:10.6814/NCCU202000382.

(21) based platform interoperability by utilizing interchain settlement with tokenization in 2019.64 Moreover, the MAS proposed a DLT-based LSM mechanism with source codes for public verifying and is formally moving on the phase five to integrate the entire ecosystem in interbank payments. 65 In the five-phase experiment, the MAS have pondered whether a new DLT-based platform is able to utilize the cross-border settlement of payment of payments and securities (DvPvP) and solves the issues existing in centralized systems. For mapping to current working mechanism, the South African Reserve Bank (SARB) designed a proof of concept (PoC) named Project Khokha to investigate the privacy solution with typical daily transaction volume in a DLT-based platform. 66 Other central banks also offer their economic review or application proposals one after another, such as Finland,67 Sweden and South Africa.68 With supports from the authorities, the traditional industrial and financial magnates (Deloitte, JP Morgan, IBM, accenture etc.) and startup companies (R3, ConsenSys etc.) target this inelastic demand and enter the blue sea with the provision of technical platforms or instruments. Apparently, the importance of the CBDC issuance is dramatically increasing as the digitalization becomes the mainstream. One interesting, but not surprising point is that compared to Sweden, China and Singapore, the traditional dominant player, the US, deems conservative towards the CBDC issuance and their 2019 research even focuses on the definition (e.g. the commodity money, central bank reserves and private bank deposit accounts)69 and proposes the concept of “central bank electronic money for all.”70. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 64. MAS, BoC. (2019). Jasper–Ubin Design Paper Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies. 65 MAS. (2019). MAS Helps Develop Blockchain-based Prototype for Multi-Currency Payments. Last retrieved from ttps://www.mas.gov.sg/news/media-releases/2019/mas-helps-develop-blockchain-basedprototype-for-multi-currency-payments (February 27 2020) 66 SARB. (2018). Project Khokha: Exploring the Use of Distributed Ledger Technology for Interbank Payments Settlement in South Africa. 67 BoF Economics Review. (2017). Central Bank Digital Currency. 68. Riksbank. (2018). The e-krona and the Macroeconomy.. 69. Federal Reserve Bank of St. Louis. (2018). Blockchain, Cryptocurrencies and Central Banks.. 70. Federal Reserve Bank of St. Louis. (2018). The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies.. 13. DOI:10.6814/NCCU202000382.

(22) Table 2 Global CBDC Prototypes Agent. Ubin. 2017, MAS. Phase I: Testing RTGS based on DLTs Phase II: Testing LSM based on DLTs Phase III: Testing DvP based on DLTs Phase IV: Testing cross-border payment based on DLTs Phase V: Enabling broad ecosystem collaboration. Jasper. 2017, BoC. Phase I: Testing RTGS based on DLTs Phase II: Testing LSM based on DLTs Phase III: Testing DvP based on DLTs. Ubin-Jasper. 2018, MAS & BoC & BoE. Enabling cross-border high value transfer based on DLTs. 政治大 2017, ECB & Phase I: Testing RTGS and LSM based on DLTs 立 BoJ Phase II: Testing LSM based on DLTs. 2014, Uruguay. Launching world’s first digital banknote pilot and using phone number as KYC, but not DLT- based. y. ‧. Testing RTGS and improving privacy solutions. 2019, Riksbank Proposing the idea of e-Krona to face with cashless society. io. e-Krona. 2018, SARB. Nat. E-Peso. Phase III: Testing synchronizing cross-border payment based on DLTs. 學. Khokha. ‧ 國. Stella. Retail. Description. sit. Wholesale. Project. n. al. er. Type. CBDC. Ch. 2019. ECCB. i Un. v. i first DLT-based digital currency as pilot in e nIssuing g c hworld’s April 2019. Retail CBDC Digital RMB. 2019, BoC. Proposing idea regarding consumer CBDC. 2019, Chinese Proposing a two-pronged strategy for CBDC issuance central bank. 14. DOI:10.6814/NCCU202000382.

(23) 2.4. CBDC Issuance Mechanism According to reports released by dominant global financial regulators and central banks all over the world, major stakeholders as well as possible issuance mechanism are elaborated as Figure 2. The stakeholders include the government, financial authorities, financial intermediaries, corporates and individuals, and they can be further labeled as decision-makers, financial intermediaries and end-users.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 2 The CBDC Issuance Mechanism. 1. Decision-makers: Including governments and regulators, the decision-makers are supposed to evaluate the potential impacts, formulate policy and take concerned accountability. Simultaneously, they have powers to change the laws for more appropriate regulation. With regard to specialization in finance, however, the regulators are distinguished as independent monetary regulator and the monetary regulatory authorities belonging to the government in lines with the principle of Reserve Bank’s Independence. (1) Government: In modern economies, governments can create economic growth with controlling the budget deficit.71 In fact, deficits could be a source of the inflation if a monetary regulator responds the deficit policy with producing more money. Federal Reserve Bank of St. Louis indicates that central banks have two approaches as response: directly purchasing government securities, or limiting 71. Martin J. Bailey. (1971). The 1971 Report of the President's Council of Economic Advisers: Inflation and Recession. The American Economic Review, Vol. 61, No. 4, 517-521.. 15. DOI:10.6814/NCCU202000382.

(24) interest. rates. after. private. sectors’. purchase. of. the. securities.. 72. (2) Financial Regulatory Authorities: Under the jurisdiction of the government, financial regulatory authorities normally are expected to ensure the financial market stability, fair market practices, the consumer protection by formulating financial policies, the properly supervision and regulation, and the financial service enterprises.73 For example, the Financial Supervisory Commission (FSC) in Taiwan.. 政治大. (3) Monetary Regulator: Whether being nationalized or not, reserve banks are responsible for formulating the state monetary policy by controlling the production and the distribution of a fiat currency in modern economies. In other words, monetary regulators have privileges to determine the policy of CBDC issuance and its amount under the premise of ensuring financial stability.. 立. ‧ 國. 學. ‧. 2. Financial Intermediaries: Financial intermediaries consist of settlement and clearing institutes, commercial banks, security exchanges, futures exchanges, financial holding companies, electronic financial services, insurance companies and others. 74 Considering the possible forms of a CBDC mentioned above, the discussion focuses on previous three types.. sit. y. Nat. n. al. er. io. (1) Settlement and Clearing Institutes: In general, whether wholesale or retail transactions involve in the process of payment, clearing and settlement. Thus, the settlement and clearing institutes have accountability of preventing money transfer process from risks such as default risks. Normally, international stock trades take one to three days (T+1 / T+2 / T+3) to be settled.75. Ch. engchi. i n U. v. (2) Commercial Banks: Universally, commercial banks accept deposits from and provide loans to end-users. Some of them also offer insurance, financial products (e.g. certificates of deposit, CDs) or other financial services. 76 (3) Exchanges: Exchanges are the facilities where allow brokers and traders to make transactions by the settlement methods such as the DVP. A typical form of exchanges is to sell stock.77. 72. Edward Nelson, Jason J. Buol. (2004). Budget Deficits and Interest Rates: What Is the Link? Last retrieved from https://www.stlouisfed.org/publications/central-banker/summer-2004/budget-deficits-and-interest-rateswhat-is-the-link (February 25 2020) 73. Financial Service Commission. Last retrieved from https://fsc.go.kr/eng/new_about/whatwedo.jsp?menu=01 (February 20 2020) 74 IMF eLibrary. (1958). The Growth of Financial Intermediaries as a Factor in the Effectiveness of Monetary Policy. Last retrieved from https://www.elibrary.imf.org/view/IMF024/157169781451968651/15716-9781451968651/15716-9781451968651_A003.xml?language=en (February 3 2020) 75 For example, The US Securities and Exchange Commission defined ‘Settling Securities Transactions’ as T+2. Last retrieved from https://www.sec.gov/fast-answers/answerstplus3htm.html (February 3 2020) 76. Investopedia. (2019). Commercial Bank. Last retrieved from https://www.investopedia.com/terms/c/commercialbank.asp (February 3 2020) 77 Investopedia. (2019). Exchange. Last retrieved from https://www.investopedia.com/terms/e/exchange.asp (February 3 2020). 16. DOI:10.6814/NCCU202000382.

(25) 3. End-users: The end-users of the CBDC issuance could be the individuals, the household, or the corporations who interact with financial system with the involvement of the financial intermediaries. Interestingly, in the future of issuing a CBDC, end-users can directly connect to both the government and the regulators. In addition, the cross-border payment mechanism is clarified as Figure 3.. 立. 政治大. ‧ 國. 學. Figure 3 Mechanism of Cross-border Payment and Settlement. ‧ y. Nat. 2.5. Summary. sit. n. al. er. io. Nowadays, CBDC research tends to analyze the heterogeneity of issuing motivations and its comprehensive impacts. For example, the BIS investigates 63 central banks about their motivations to issue either a wholesale or a retail CBDC with a standardized questionnaire and concludes that only a small proportion of respondents are proceeding to experimental stage and the issuance of a CBDC seems unlikely in medium term except for Swedish e-krona, the ECCB CBDC and the DP / EP in mainland China.78 Another paper, “Central Bank Digital Currency: Welfare and Policy Implications,” focuses on the changing effects of welfare improvements, the monetary policy and the possible optimal behavior of a central bank and induces a model to define the role of the CBDC.79 By discussing means of payment and asset exchange, it was found that a CBDC with bearing-interest is likely to improve the intertemporal efficiency and to mitigate incentive problems with the substitution of the private banking.. Ch. engchi. i n U. v. However, unlike the TA or the macroeconomic forecast, an overall evaluation mechanism on CBDC is still lacking. The only three paper for CBDC assessment is written by the BoC and by the Federal Reserve Bank of St. Louis, the US. In “Central Bank Digital Currencies: A Framework for Assessing Why and How (2016),” the BoC intends to answer (1) why a reserve bank would take the CBDC issuance into consideration and (2) what form a digital currency issued by the monetary authorities should look like, mainly from the perspective of issuing cost and the transaction 78. BIS. (2019). Proceeding with Caution – a Survey on Central Bank Digital Currency.. 79. Williamson, S. (2019). Central Bank Digital Currency: Welfare and Policy Implications, University of Western Ontario.. 17. DOI:10.6814/NCCU202000382.

(26) efficiency. 80 On the other hand, “Assessing the Impact of Central Bank Digital Currency on Private Banks (2018)” combines the government debt model (Diamond, 1965) and two banking models (Klein, 1971; Monti, 1972) to investigate how a monopolistic banking sector would be influenced by the issuing of an interest-bearing CBDC, and concludes that banks may raise their deposit rates for competition in concerns of the decreasing cash demand and diminishing monopoly profits.81 The latest report, “A Framework for Analyzing Monetary Policy in an Economy with E-money,” by BoC selects the macroeconomic perspective to find out the optimal monetary policy of a central bank from a policy-setting game with the e-money issuers, along with the possible equilibria that comprise the welfare loss and the increasing inflation in a cashless state, to conclude that a CBDC results in “a simple optimal policy that achieves the first best.” 82 Apparently, opinions from outsiders, for example technology community, are still missing from the discussions.. 立. 政治大. ‧ 國. 學. ‧. With more than half-century exploration, the TA tools have specialized some specific functions in accordance with different industry patterns. For example, ethical aspect was proposed in order to fit the attributes of the public health industry. To some extents, the internal Fintech adoptions such as the DLT-based database probably work in lines with the ITAA framework,83 since the theory initially wanted to answer the question that "How can organizations properly manage the process of assessing and adopting new information technology?”84 Nevertheless, once technological changes are likely to impact on considerable end users, an entire ecosystem and even multiple domains, the ITAA is no longer applicable. In addition, due to the specific stakeholders and diverse impacts, the economic aspect in the CBDC issuance may requires more sophisticated categories: Macroeconomics (monetary policy, fiscal policy and interest rate), microeconomics (the influences of cashless society to firms and household) and financial system (the interaction among the government, regulators and market Intermediaries). Unfortunately, an overall analysis on the adoptions of the financial technologies is still absent from the TA development. 85 Moreover, the economic, societal and political impacts should extend from domestic to international scopes because of the open economy.. n. er. io. sit. y. Nat. al. 80. Ch. engchi. i Un. v. BoC. (2016) Central Bank Digital Currencies: A Framework for Assessing Why and How.. 81. Federal Reserve Bank of St. Louis. (2018). Assessing the Impact of Central Bank Digital Currency on Private Banks. 82 BoC. (2019). A Framework for Analyzing Monetary Policy in an Economy with E-money. 83. Sid L. Huff and Malcolm C. Munro (1985). Information Technology Assessment and Adoption: A Field Study. MIS Quarterly, Vol. 9, No. 4, 327-340. 84 At that time, most research focused on the technology transfer within research and development (R&D) labs. Activities in information system departments tended to be ignored until more adoptions in the areas of hardware, software and communications were noticed. Eventually a holistic analysis of ITAA finally emerged: After the identification of four generic models (issue driver, technology driven, opportunistic or normative ideal) based on different driving forces, the adoption phases (awareness, interest, evaluation, trial, implementation or diffusion) and organizational roles (users, influencers, deciders, gatekeepers, planners or sponsors) should be clarified, along with description of the information gathering mechanism. Such framework is without a doubt helpful from organizational perspectives. 85 Curtiss, P.; Kreider, J.; Cohen, D. (1999). A Methodology for Technical and Financial Assessment of Distributed Generation in the US.. 18. DOI:10.6814/NCCU202000382.

(27) Therefore, based on TA theory, this thesis intends to evaluate as diverse stakeholders and possible impacts of issuing a CBDC as possible and providing some insights for policy makers such as a central bank. In the following, before moving on further analysis, Chapter 3 will explain the research approaches and framework first.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 19. i Un. v. DOI:10.6814/NCCU202000382.

(28) 3. Research Approaches and Methods This thesis is motivated by the question, “How do technological innovations, particularly the issuance of a CBDC, impact current the financial system?” and eventually selects the perspective of central banks to evaluate the innovative policymaking process. To form a research framework, diverse sources from social media, technology communities and first-hand communication were widely collected as materials. For example, if there remained some technical or design concerns during the initial survey, consulting emails would be sent out, including to the ECB, the MAS, the NDB, the BoC, the Lietuvos bankas, the Riksbank, and the IMF for further clarification. Fortunately, 90% of them received positive replies. Admittedly, the accurate, sophisticated and reliable raw information were quite valuable for the research framework. Next, based on an overview of the TA paper, a clearer picture of the framework proposal emerged as Figure 4.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Figure 4 Research Framework. The research intends to provide some insights for the early-stage policy-making process; hence, its framework consists of three dimensions: policymakers, stakeholders and potential impacts. From the perspective of a central bank, it is essential to clarify the issuing motivations, investigate the types of CBDC and evaluate the possible challenges. First, the motivations directly determine the experimental patterns and the following survey direction. For example, the cashless society is more likely to take retail innovation into consideration, whereas the view of organizational management may tend to explore the solution to cost and efficiency in the wholesale scenario. Second, the decision of the issuing types, either wholesale or retail form, indicates different scopes of stakeholders and results in the corresponding impacts, which are the other two dimensions of this framework. Last but not least, the challenges are another critical point for policymakers to assess whether or not the innovation is worth further investigating and investing.. 20. DOI:10.6814/NCCU202000382.

(29) To examine the framework, several interviews with key stakeholders were conducted, including monetary regulators, financial intermediaries, academics and potential technical supporters. Either monetary regulators or intermediations play critical roles in the financial ecosystem; hence, these two agents are naturally included in the earlystage CBDC evaluation. However, in the initial survey it is found that central banks tend to cooperate with outside partners, such as the consulting industry, technical providers and academics, to acquire the crucial know-hows. In order to consider as diverse participants as possible, people from the academic and technology communities were invited to the interviews, and the only requirement for the participants was to have directly or indirectly joined the relative assessment projects, whether domestic or not. As a Taiwan-based study, six interviewees were selected from the domestic academics, few local technical providers with international business and a multinational banking Taiwan branch. The only oddity takes place when it comes to the monetary regulator: team members of Project Stella at ECB accepted in-person and online interview invitations to share their opinions on five-year developments of CBDC from the European perspective.. 政治大. Originally, this study intended to interview the working group which was responsible for evaluating CBDC in Taiwan; unfortunately, it seemed over sensitive for an ongoing project to reveal too much uncertain details. Therefore, some key members of the central bank pilot reports in the previous survey were invited to further interviews, such as Project Ubin at the MAS, Project Jasper at the BoC, Project Stella at the ECB, and Riksbank e-Krona. Finally, the ECB expressed their willingness to the in-depth interview. Notably, before the formal online interview, two team members of Project Stella were visited to clarify some technical issues as well as the next step exploration at the ECB headquarter in Frankfurt. Probably the previous connection became the key point of the formal in-depth interview.. 立. ‧. ‧ 國. 學. sit. y. Nat. n. al. er. io. This study follows the notion of qualitative research methods so all data collection was accomplished by the in-depth interviews and the case study. As an emerging field, the interview candidates were expected to have related experiences so their opinions to some extent could reflect the realistic situations. Reached via emails or communication application, these candidates received a motivation letter as well as an interview outline, and they could decide whether or not to accept the invitation of an in-depth interview. Meanwhile, participants from the central bank, commercial bank, academics and technical providers were interviewed using a standardized but flexible questionnaire. Based on the proposed framework, the questionnaire generated through personal observation from current reports and research paper contained ten questions and was designed as Appendix 1. In particular, an expert in the Bank Governance and Compliance at the NDB actively provided assistance for the framework and did the questionnaire review.. Ch. engchi. i Un. v. There were seven interviews completed in total and all interview content was sent to the participants for the terminal confirmation in case there was any misunderstanding. As the field study completed, some significant findings and concerns were highlighted as conclusion in the end of the thesis. However, limited to the emerging technology, this thesis does not involve in the analysis of different development stages; instead, only the initial phase of assessment is considered.. 21. DOI:10.6814/NCCU202000382.

(30) 4. Evaluating the Issuance of Central Bank Digital Currency (CBDC) 4.1. Monetary Regulator: European Central Bank (ECB) Participants of Project Stella at ECB firmly believed that the existing banking ecosystem should not be challenged despite the adoption of a CBDC because a state currency was expected to be issued on grounds of the legal compliance. Take a wholesale CBDC for instance. Either the DvP or the payment versus payment (PvP) mechanism of interbank transactions, the framework as well as the regulating process have been well-defined;86 thus, a CBDC is merely regarded as one of the options in the technical selection and tends to be naturally eliminated if not achieving the high requirements of the existing payment system. The interviewees summarized possible issuing motivations as: (i) preparing for the declining use of cash; and (ii) improving the safety and security of transaction mechanism, and pointed out that the single Euro payments area (SEPA) had no urgency to replace current payment systems as roughly 79% of the transactions at points of sale (POS) were cash-based in 2016.87 Meanwhile, several challenges including legal compliance and technical design approaches may demoralize the authorities if no ample research supports the policy. In particular, there is limited experience in the large-scale adoption of the digital tokens and it calls into question whether a large economy such as the US, the EU and Japan, can learn from the prototypes of the small nations.. 立. 政治大. ‧. ‧ 國. 學. Nat. y. sit. n. al. er. io. During the interview, the staff at ECB emphasized that the issuance of a CBDC would never aim at subverting current financial systems and that it made no sense to let central banks take over the banking business. Therefore, internal research on additional measures should be carefully carried out in order to ensure the CBDC circulation. For example, in avoid of a retail CBDC hoard and to encourage positive cashflow, holding fees for a certain amount may be introduced. Simultaneously, privacy and security should be taken into consideration when it comes to the technical design. Moreover, potential pressures from the international competition in an open economy may urge other central banks to issue CBDCs in pursuit of striking a balance. Still, with strong currency such as Euros, the ECB has no plans to substitute the TARGET Instant Payment Settlement (TIPS) at this stage,88 and will keep track of the development of the CBDC. “Such as banknotes,” the team members at Project Stella restated, “A banking system is supposed to, and will, keep similar arrangements even with the issuance of CBDC. ”. Ch. engchi. i n U. v. 4.2. Financial Intermediaries: Commercial Banks An assistant manager shared his opinion based on his experience in the banking industry, and wondered how the future role of commercial banks would look like once the issuance of CBDC came true. Although CBDC deems to simplify the process and 86. For example, the PFMI.. 87. ECB. (2017). The Use of Cash by Households in the Euro Area. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf 88 TIPS. Last retrieved from https://www.ecb.europa.eu/paym/target/tips/html/index.en.html (February 25 2020). 22. DOI:10.6814/NCCU202000382.

(31) accelerate the liquidity of cash flows, the direct connection between the central banks and the end-users confuses financial intermediaries. The assistant manager presumed securities may decrease because of the reduction of liquidity risk, and intact transaction records seemed beneficial for ensuring the AML and training machine learning (ML) model. However, strong currencies with lower holding costs may dominate the market while the user privacy without proper protection is under threats. An intriguing point mentioned by internal staff was that the digitalization made it harder to scam. Because tellers in Taiwan have formed a strong corporation with police, the removal of tellers in the money transfer process may increase related crimes. The transformation of the banking system was one of the main arguments. From the organizational perspective, the cost and the efficiency are expected to improve with wholesale CBDC, whereas the unemployment rate of consumer finance may increase when it comes to a retail CBDC. In fact, as online tellers become more popular, the redundancy of tellers seems unavoidable. All evidence shows that current business models of commercial banks are facing challenges with the upcoming CBDC issuance. Therefore, the position of banking should be further clarified in the policy-making process. In the end of the interview, the assistant manager addressed that educating endusers and operators would be not only costly but also challenging, and concluded, “That would be weird if the Central Bank takes the place of commercial banks, but the transformation of banking is somehow necessary.”. 立. 政治大. ‧. ‧ 國. 學. y. Nat. sit. 4.3. Academic & Research Institutes. n. al. er. io. An associate professor from a national university paid much attention on the trust foundation behind CBDC issuance and believed it prior for policy makers to clarify stakeholders as well as motivations. Mostly, weak currencies are regarded as commodities in the currency exchange; yet, once the efficiency of the currency transfer enhances, the equilibrium of strong and weak fiat monies may change with regard to regulating costs, amount of reserves, and mutual interactions.89 If any strong currency turns into the digital form, an export-oriented economy with weaker currency, for example Taiwan, may encounter obstacles due to local companies tending to hold foreign money with reduced costs. Next, to what extent can the policy be viewed as a successful model? For example, a cashless society such as Sweden with only 13% of cash purchase is supposed to have the remaining 87% using digital currency.90 Can current technologies and the organizational structure satisfy such high standard with national scale? Although mobile payments in China are popular,91 cash circulation in countryside or black market is still important. 92 Moreover, it calls into questions whether the costs of the trust building are affordable for the government. Current. Ch. engchi. i n U. v. 89. Akihiko Matsui. (1998). Strong Currency and Weak Currency, Journal of the Japanese and International Economies Volume 12, Issue 4, p305-333. Last retrieved from https://www.sciencedirect.com/science/article/pii/S0889158398904063 90 Rikbank. (2018). Payment Patterns in Sweden 2018. Last retrieved from https://www.riksbank.se/globalassets/media/statistik/betalningsstatistik/2018/payments-patterns-in-sweden2018.pdf 91 According to ‘Going cashless in Shanghai,’ it is indicated that in 2016 China’s GDP was $11.19 trillion but with $23 trillion in mobile payment transactions. Last retrieved from https://www.marketplace.org/2019/01/15/world/going-cashless-shanghai/ (February 25 2020) 92 In 2016 China’s M0 was 6.34547 trillion. 23. DOI:10.6814/NCCU202000382.