Thailand’s central bank is continuing developments on the central bank digital currency (CBDC) project as the apex bank will test its CBDC for transactions among large businesses.
Thailand’s CBDC Reaches Third-Stage Development
According to a reportby the Nation Thailand on Thursday (July 16, 2020), the Bank of Thailand (BOT) CBDC project is already at the third stage of development. Vachira Arromdee, assistant governor of the BOT, made revealed plans of the CBDC, adding that the project was already being used for corporate financial transactions.
As reported by BTCManager in June, the BOT collaborated with SCG, Thailand’s oldest and largest cement manufacturer, to create a prototype CBDC payment system for businesses. The CBDC pilot project will run for one year, starting from July 2020.
Speaking about the effects of a national digital currency, Vachira stated that a CBDC currency could adversely affect commercial banks by the elimination of intermediaries. However, the BOT assistant governor said a digital payment platform will lower the cost of financial transactions.
Vachira added that Thailand’s central bank is working with the Hong Kong Monetary Authority (HKMA) to deploy the CBDC for transactions later in September 2020. The two banks signed a memorandum of understanding (MoU) back in May 2019 to work together on fintech innovations.
While the third phase sees CBDC use in large businesses, the fourth stage will involve the use of the digital currency among retailers. However, the BOT assistant chief said the bank will first conduct an extensive study. A statement from Vachira reads:
“After that, we plan on moving into the fourth phase by expanding to retailers, but this phase will require a cautious study of both pros and cons. By moving into the retail market, [CBDC] could lead to a major disruption of the overall financial market and financial stability, while the role of financial institutions could be changed.”
Vachira also expressed concern on the public use of CBDC through e-wallets, stating that the BOT will carry out research on the advantages and disadvantages, and the effect on financial stability.
More Central Banks Research CBDC
CBDCs continues to gather momentum as more central banks carry out research on digital currency use. China, which continues to be ahead, has seen institutions trial its CBDC project. BTCManager reported a partnership between China’s central bank and Meituan Dianping to trial the planned CBDC.
Japan’s central bank is also studying the modalities for a digital yen, while the Japanese government also stated that was considering including CBDC in its 2020 fiscal policy. South Korea is not left out, as the Bank of Korea in June set up a committee to review possible regulatory hurdles for its CBDC project.