Central Bank Governor Yang Chin-long: Stablecoins are "wildcat banks," TWQR annual transactions reach 592 trillion

Taiwan’s central bank governor Yang Chin-long stated that the future of payments will adopt a dual-track strategy: on one hand, continuously optimizing TWQR and promoting cross-border interoperability; on the other hand, steadily advancing wholesale CBDC and tokenized financial infrastructure. In 2024, TWQR’s transaction volume reached NT$582 trillion, 23 times the GDP of that year. Yang Chin-long warned of stablecoin risks, likening them to “wildcat banks,” which in history caused large-scale bank runs due to lack of regulation and insufficient reserves.

Stablecoins as a Historical Warning of ‘Wildcat Banks’

In his speech, Yang Chin-long specifically warned about the risks of stablecoins, using the historical analogy of “modern wildcat banks.” Wildcat banks refer to the banking chaos during the US Free Banking Era (1837-1863), when anyone could set up a bank and issue their own banknotes. These banks were often located in remote areas and lacked sufficient gold or silver reserves. When depositors tried to redeem their banknotes, the banks were often unable to pay, resulting in large-scale bank runs and financial panic.

Yang Chin-long believes that current stablecoins present similar systemic risks. Although mainstream stablecoins like USDT and USDC claim to have 1:1 asset backing, their transparency, audit standards, and regulatory frameworks are still far inferior to traditional banking systems. USDT issuer Tether has long been questioned for lack of audit transparency and controversy over reserve composition. Once market confidence collapses and large-scale redemptions occur, whether stablecoins can truly withstand liquidity pressure remains unknown.

The central bank governor’s warning carries significant policy signals. It shows that Taiwan’s regulators take a cautious—even skeptical—attitude toward privately issued stablecoins, in contrast to some European and American countries’ active legislative efforts for stablecoins. Taiwan’s central bank prefers a government-led CBDC solution over relying on stablecoins issued by private enterprises.

This stance also reflects the central bank’s emphasis on monetary sovereignty. Although stablecoins are pegged to fiat currencies, issuance rights are in the hands of private companies, which weakens the central bank’s control over money supply. If stablecoins become widely used in payments, there could be a trend of “private money replacing legal tender,” a situation no central bank wants to see.

Four Major Similar Risks Between Wildcat Banks and Stablecoins

Opaque reserves: Wildcat banks concealed insufficient reserves, and stablecoins have inconsistent audit standards.

Run vulnerability: Liquidity may be insufficient during large-scale redemptions.

Regulatory vacuum: Lack of unified regulation during the wildcat bank era; current stablecoin regulation is similarly fragmented.

Systemic risk: The collapse of a single stablecoin could trigger a chain reaction, impacting the entire crypto ecosystem.

The timing of Yang Chin-long’s warning is noteworthy. By 2025, the market cap of stablecoins has surpassed $180 billion, with usage in cross-border payments and DeFi continuing to climb. The more people rely on stablecoins, the greater their potential systemic risk. Taiwan’s central bank is issuing early warnings, possibly paving the way for stricter future regulation.

Wholesale CBDC Becomes Central Bank’s Strategic Focus

In contrast to the cautious attitude toward retail CBDC, Yang Chin-long made it clear that the central bank will actively promote wholesale CBDC and tokenized financial infrastructure. Wholesale CBDC refers to digital currencies used only among financial institutions, mainly for large-value settlements and cross-border payments, not for the general public. This approach allows the central bank to enhance the efficiency and security of the financial system without changing the existing retail payment landscape.

The core advantage of wholesale CBDC is real-time settlement. Traditional interbank settlements usually require T+1 or T+2 days, while blockchain-based wholesale CBDC can achieve instant settlement, greatly reducing settlement risks and capital costs. This is significant for liquidity management and risk control in financial institutions.

Tokenized financial infrastructure is a key application scenario for wholesale CBDC. Traditional assets such as bonds, stocks, and real estate can be tokenized into digital assets that can be traded and settled on the blockchain. If settlement of these tokenized assets uses wholesale CBDC, “delivery versus payment” (DvP) can be achieved in real time, eliminating counterparty risk.

Yang Chin-long’s emphasis on tokenized financial infrastructure shows that the central bank’s vision has expanded to the digital transformation of the entire financial system, not just the digitization of payment tools. This strategic vision gives Taiwan a relatively forward-looking position in the global CBDC race. The Bank for International Settlements (BIS) and multiple central banks are exploring the combination of wholesale CBDC and tokenized assets, and Taiwan’s active participation will help secure a place in future international financial infrastructure.

TWQR’s Annual NT$582 Trillion Transactions Become a Model for Payment Integration in Taiwan

(Source: Central Bank of Taiwan)

Yang Chin-long specifically highlighted the effectiveness of TWQR. To address the pain point of incompatible QR code standards in the market, the Financial Information Service Co. (FISC) has, since 2021, established an “electronic payment cross-institution shared platform,” linking banks and e-payment institutions. According to central bank data, TWQR’s transaction volume has grown year by year, reaching NT$582 trillion in 2024—23 times that year’s GDP.

This NT$582 trillion figure needs to be understood correctly. It does not refer to NT$582 trillion of new economic value, but rather the total amount of all transactions processed through the TWQR system, including repeated calculations. For example, the same money may change hands multiple times a year, and each transfer is counted in the transaction volume. Nevertheless, the figure still demonstrates Taiwan’s huge success in retail payment integration.

TWQR’s success lies in solving real pain points. Before TWQR, Taiwan’s market had dozens of payment tools such as JKOPay, LINE Pay, and Apple Pay, each with its own QR code standard. Merchants needed to display a row of QR codes at the counter to accept all payment methods. TWQR’s unified standard allows merchants to accept payments from all participating institutions with just one QR code, greatly improving convenience.

In addition, the central bank is actively promoting cross-border payment interoperability. FISC is working on two-way payment interoperability with Japan (PayPay), South Korea (BC Card), and Singapore (NETS), and is closely following international trends in fast payment system (FPS) interconnection. This cross-border interoperability will allow Taiwanese travelers in Japan, Korea, Singapore, and other countries to use Taiwan payment apps directly for purchases, without the need to exchange cash or use credit cards, greatly enhancing cross-border payment convenience.

The Complete Framework of Taiwan’s Dual-Track Payment Strategy

Optimization of existing systems: TWQR integrates all electronic payments, with annual transaction volume of NT$582 trillion

Cross-border payment interoperability: Establishing two-way fast payment links with Japan, Korea, Singapore, etc.

Wholesale CBDC: Advancing real-time interbank settlement and tokenized asset settlement

Retail pilot applications: Digital voucher issuance and government cash subsidies as early use cases

The wisdom of this dual-track strategy lies in gradual innovation. Taiwan’s central bank has not chosen a radical, fully digital transformation but is optimizing existing systems while gradually testing and deploying new technologies. This pragmatic approach reduces systemic risk and lays the groundwork and infrastructure for future comprehensive transformation.

Real-World Validation of the Digital Public Infrastructure Cash Flow Platform

Yang Chin-long pointed out that although the central bank completed a prototype retail CBDC platform in 2022, with functions such as transfers and consumption, there is currently no urgent need to issue a retail CBDC given Taiwan’s already diverse and convenient payment tools. This pragmatic attitude contrasts with some countries that are rushing to launch retail CBDCs.

However, this does not mean the plan has stalled. The central bank has instead applied the technology to a “digital public infrastructure cash flow platform,” collaborating with the Ministry of Digital Affairs to use it for government digital voucher distribution and cash subsidies. This “pilot first, promote later” approach, focusing on improving government efficiency, shows that the central bank prefers to solve specific pain points in the retail segment rather than abruptly changing public payment habits.

For example, in the Hakka Coin project to be launched by the Hakka Affairs Council in August 2025, and the pilot project for distributing NT$10,000 cash in November, the platform demonstrated a high throughput capacity of 2,505 transactions per second, proving the technology’s feasibility and stability. This technical verification is extremely important, as it shows that the central bank’s CBDC technology is already capable of large-scale commercial use, only waiting for the right time to launch.

Choosing government subsidies and digital vouchers as pilot scenarios is also highly strategic. These scenarios are government-led, have a large user base, and require high security, making them ideal for testing all functions of the CBDC system. If the system can operate stably in these scenarios, it will provide a solid foundation for future expansion into broader retail payments.