Bank of Thailand Revealed Plans To Focus on Retail Digital Currency Nextby Fintech News Singapore March 15, 2021
Bank of Thailand (BOT) announced the results of its Central Bank Digital Currency (CBDC) for Business Prototype Development Project and revealed plans to focus on retail CBDC as its next step.
Initiated in June 2020, Project Inthanon marks the first time the BOT expanded the scope of CBDC development to business users.
The CBDC project was conducted in collaboration between BOT, Siam Cement Group (SCG), and Digital Ventures Company Limited (DV) with support from technology provider ConsenSys.
The project aimed to explore how CBDC can be used by the business sector to enhance efficiency and flexibility of payments while supporting financial innovation.
The CBDC system prototype utilises Distributed Ledger Technology (DLT) in integrating with the procurement management, billing, and payments systems between SCG and its suppliers.
BOT’s test results demonstrated that DLT can increase payment efficiency for businesses by allowing users to set various conditions on the CBDC to enhance flexibility in handling business activities.
The central bank’s experiments include setting conditions for payments to be made as specified in invoices in supply chain financing and setting conditions to enhance efficiency in cash management.
However, BOT found that the usage of DLT in its prototype has some limitations, particularly in supporting large transaction volumes and preserving transaction privacy.
The regulator intends to resolve these issues through technology development or system design that it said will need to be explored further.
BOT will be focusing on the research and development of a retail CBDC from 2021 to 2022.
BOT said in a statement that “the design of CBDC for widespread usage will need to take into consideration safety and efficiency as well as implications on monetary policy, financial system stability, and the roles of financial institutions and the central bank”.
The central bank added that it is also “important to involve the general public in our CBDC development process, to ensure that CBDC is conducive to financial innovation in this era of digital transformation”.
BOT will be publishing a study on retail CBDC issuance in the next stage of this project.
BOT is following in the footsteps of the National Bank of Cambodia who was the first in South East Asia to launch its retail CBDC named Project Bakong.
Featured image credit: Edited from Unsplash