BoT taking CBDC to retailers
The Bank of Thailand plans to explore expanding the central bank digital currency (CBDC) to retailers in the next phase of development after testing the CBDC for corporate transactions.
Thailand's central bank has been paying attention to new financial innovations after testing a CBDC prototype payment system for wholesale business under the distributed ledger technology (DLT) of Project Inthanon, said Vachira Arromdee, assistant governor for financial market operations group.
The central bank has collaborated with eight local banks and Siam Cement on developing DLT for wholesale business and using CBDC in the third development phase under Project Inthanon.
The Bank of Thailand has also cooperated with the Hong Kong Monetary Authority on testing corporate cross-border payment via the digital payment platform.
Under a collaboration between the two central banks, a central bank partner will be added, meaning the Hong Kong dollar will help diversify the platform.
For the third development phase, the Bank of Thailand expects to see new use cases for corporations, explore a new design for distributing CBDC and evaluate the implications for financial institutions.
All of these should be finalised by this year, offering a clearer picture of the digital payment platform, she said.
"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," said Ms Vachira.
"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."
Other central banks have also been exploring a digital currency payment system for retailers.
In China, the regulator plans to use CBDC for retailers to replace cash payment, with the role of financial institutions remaining intact.
Ms Vachira said the Bank of Thailand also plans to explore the possibility of using CBDC for individuals to launch new financial innovations in line with the digital era.
A digital payment platform will reduce the operation cost of financial transactions, she said.
Yet the central bank needs to maintain overall financial and economic stability, which is its core task, said Ms Vachira.
The Bank of Thailand also had discussions with Facebook about its digital currency, Libra, and possible adoption in the Thai market.
Allowing such a digital currency to be used in Thailand under the existing stringent regulations is not easy, she said, just as other countries have baulked at regulating Libra.