Thailand’s central bank in partnership with SCG — one of the country’s largest conglomerates — is set to run a pilot test for a central bank digital currency (CBDC).
Thailand Moving Forward with Digital Currency Plans
According to the Bangkok Post, SCG has signed a memorandum of understanding (MoU) with the Bank of Thailand (BOT), and Digital Ventures to create a prototype CBDC. The pilot test for the CBDC will be used in developing an efficient purchasing and payment infrastructure in the country’s business sector.
Commenting on the partnership with the Bank of Thailand, SCG chief financial officer Thammasak Sethaudom, remarked:
“SCG is pleased to work with the Bank of Thailand and Digital Ventures to optimise digital technology in business operations and initiate the development of the Central Bank Digital Currency system which is vital for the country’s economic development. Prior to this, SCG has partnered with Digital Ventures, a leading fintech venture capital firm, and adopted its Blockchain Solution for Procure-to-Pay (B2P) since 2018 to speed up procurement, invoice, and payment processes.”
In a press release issued by the BOT, the apex bank described the pilot test as an important milestone in expanding the scope of its CBDC plans. According to the bank’s statement, the project will commence in July 2020 and will run for a year.
The BOT recognizes and supports the important roles of financial innovation and technology in enhancing the competitiveness and readiness of the business sector entering the digital age. The project marks an important step in broadening CBDC’s scope and adoption to wider audiences, starting with large corporates. In this project, the CBDC prototype will be integrated with the procurement and financial management systems of the Siam Cement Public Company Limited and its suppliers developed by Digital Ventures Company Limited. The prototype is expected to serve as a financial innovation that enables higher payment efficiency for businesses such as increasing flexibility for fund transfers, or delivering faster and more agile payments between suppliers. The project will begin in July 2020 and is expected to conclude by the end of the year, after which the BOT will publish the project summary and outcome accordingly.
Apart from the pilot test, BOT is also coordinating Project Inthanon with eight major financial institutions to create CBDC-based real-time gross settlement (RTGS) systems. Back in Nay 2019, As reported that Wipro and R3 were launching a blockchain-based interbank settlement system under the aegis of Project Inthanon.
CBDC Fever Not Going Away
The news coming out of Thailand is the latest in a raft of CBDC-related developments from several countries in 2020. Earlier in June, South Korea announced the creation of a committee tasked with evaluating the regulatory obstacles associated with issuing a central bank digital currency.
Several reports indicate China is leading the global CBDC race with its planned digital currency electronic payment (DC/EP) project already in the testing phase. Major fast-food franchises like Starbucks and McDonald’s are participating in pilot roll-outs.
The involvement of dozens of countries in active CBDC development is putting stakeholders on alert especially regarding the future of the U.S. Dollar (USD) as a reserve currency. In May, JP Morgan & Chase issued a report stating that sovereign digital currencies could disrupt USD hegemony.