Taiwan central bank governor considers interest-free CBDC design to prevent fiat deposit flight

cointelegraph.com:

As reported by local news outlet bnext.com on Wednesday, Chin-long Yang, Governor of the Central Bank of the Republic of China (Taiwan), recommended a no-interest design for the country's central bank digital currency, or CBDC, pilot. In explaining the decision, Yang said that a CBDC where interest is paid on digital asset deposits would likely become a replacement for fiat New Taiwan Dollar (NT$) deposits in banks. "Once the banks' available deposits decrease," Yang explained, "it would lead to a corresponding increase in the cost of financing and thereby increase the cost of borrowing for consumers." 

Yang further warned that even interest-free CBDCs could lead to "digital bank runs" during times of financial instability and quickly spiral into a liquidity crisis for financial institutions. But nevertheless, the country's central bank governor recognized a surge in demand for electronic payment solutions in recent years:

Taiwan is currently in the second stage of its CBDC pilot program, where its central bank provides the CBDC to five selected Taiwanese banks for distribution among consumers. Based on the pilot program results, the central bank will proceed to the next steps. However, it has already been identified in trials that the distributed ledger technology within the CBDC could not handle high frequency, high volume consumer transactions. Another point of concern is the lost functionality of the payment solution in the event of power outages.