Central bank poised to launch Retail CBDC

Central bank poised to launch Retail CBDC

The Bank of Thailand is scheduled to launch the Retail Central Bank Digital Currency (CBDC) by the second quarter next year, allowing Thais to access more convenient and secure financial services.

Vachira Arromdee, assistant governor of the financial markets operation group at the bank, said the main objective of Retail CBDC is providing citizens with access to more convenient and secure financial services.

In addition, the development of a Retail CBDC will support a technology-led future that is efficient and cost-effective, contributing to the development of more diverse and innovative financial services, she said.

Retail CBDC is a digital form of money issued by the central bank comparable to physical banknotes and can be used in financial transactions both online and offline.

Moreover, Retail CBDC is easily portable and has the potential to be used in various innovative financial services.

The central bank foresees a global rise in digital currencies issued by private firms wanting to provide faster, cheaper and more efficient means of payment to consumers.

While offering improved user experience, the potential widespread adoption of these privately issued digital currencies could pose risks not only to users, but also to the stability of monetary, financial and payment systems.

As such, it is important for the central bank to prepare for a future financial landscape in which digital currencies could play a greater role.

A retail CBDC could serve as a trusted and safe means of payment accessible by Thai households and business alike, existing alongside cash and other payment instruments, said Ms Vachira.

As a reliable payment infrastructure, it could help safeguard the stability of the Thai financial and monetary system in a new financial landscape, she said.

“The central bank has been developing the digital currency for individual usage after the progress of wholesale CBDC. Public hearings for Retail CBDC are underway and will run until June 15 to hear Thais’ opinions on whether they support the central bank’s direction on digital currency design and development,” said Ms Vachira.

“With Retail CBDC development based on the two-tier system, the central bank has no objective to cut middlemen, meaning financial institutions, from the financial system. Banks and other types of financial institutions will still be financial service providers connecting the central bank and consumers.”

She said financial institutions do need to develop services and improve business efficiency in response to consumer requirements, such as innovative products that are lower cost and have stronger security in the digital era.

The central bank initially plans to design the individual digital currency with no interest payments, similar to existing physical banknotes, according to Ms Vachira.

Retail CBDC development will not impact overall financial system stability, nor the central bank’s monetary policy, she said.

Retail digital currency often takes around 4-5 years of development before official implementation.

Referring to the People’s Bank of China, she said China’s central bank started study of its Retail CBDC in 2015 and launched individual digital currency as a pilot project in 2019.

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