The Pheu Thai Party-led coalition government believes its flagship policy, the 10,000-baht digital currency handout, will unleash an "economic tsunami" of consumption, benefiting many sectors of the economy.
The party also claims using blockchain technology for the measure will help address income inequality and accelerate the growth of the digital economy.
The economic committee of the Pheu Thai Party finally revealed the scheme's plans.
What is digital currency?
Digital currency refers to currency created digitally using blockchain technology. In Thailand, it is commonly known as digital baht and the Bank of Thailand plans to issue Central Bank Digital Currency (CBDC).
Individuals can store and manage their digital currency using a digital wallet.
The Pheu Thai Party plans to develop its own digital wallet in the form of a utility token, which is not a new currency, but rather a digital representation of the baht.
Utility tokens are designed to facilitate transactions (sending and receiving payments) using blockchain technology, with one digital token equivalent to one baht.
The digital token cannot be exchanged for other currencies and is specifically intended to support the 10,000-baht digital currency handout meant to stimulate the economy.
However, the central bank's rules for utility tokens do not allow the use of digital tokens as a means of payment, meaning Pheu Thai is likely to discuss revising the regulations with the regulator.
Who is eligible to receive the digital handout?
All Thai citizens age 16 and older are eligible to receive the digital wallet. Individuals with disabilities and the elderly who receive other forms of welfare still receive the full amount without any deductions.
￼What are the terms and conditions of the digital wallet?
The digital currency can be used to purchase various daily necessities, excluding prohibited items such as drugs, cigarettes, alcohol, gambling and certain online products. The currency cannot be used to repay debts or transferred into fiat currency, except for registered merchants under the value-added tax system.
In addition, the currency can only be spent at local shops and businesses within four kilometres of a recipient's registered address, in a bid to stimulate local economies and prevent a glut of income in urban areas.
The currency is valid for six months and there is no need to register to access the wallet. Users simply download the new national wallet app to receive their share.
The Pheu Thai Party now says it is looking to adjust some conditions, in particular the 4km radius restriction, to make the measure more convenient for users.
The area of eligible spending could be increased to help people living in remote areas with few eligible shops nearby, deputy secretary-general and spokesperson for the economic committee of the Pheu Thai Party, Phaophum Rojanasakul, said on a TV programme recently.
Why opt for a digital wallet?
The party studied the digital wallet scheme for some time before the general election. Backed by the security of blockchain technology, a digital wallet would minimise financial risks and offer a safe channel for various financial transactions because it is completely traceable.
Furthermore, there is no speculation or fluctuation in its value as a digital wallet is not a new currency or a form of cryptocurrency, making it a reliable system, said the Pheu Thai Party.
Eligibility conditions can be set in terms of age and spending parameters based on programmable blockchain technology.
Why was 10,000 baht per person chosen?
"The amount could promote investment by a household rather than routine spending. The multiplier effect of the digital handout will revive the economy and generate income for people," said Mr Phaophum.
"Under the best-case scenario, we assess a 2.6-2.7 times multiplier effect from the scheme."
For example, if there are 10 members of a household and all of them are eligible for the scheme, the family receives a total of 100,000 baht. For some families, 100,000 baht is enough to open a small shop, buy additional raw materials or make other investments to increase household income, he said.
If the amount is smaller, such as 5,000 baht per person, or given as a cash handout as with previous governments, recipients will use the money for routine spending, which creates a lower multiplier effect, said Mr Phaophum.
How do tech pundits view the scheme's development?
Blockchain and technology analysts believe the digital wallet scheme could create a new digital payment infrastructure and stimulate the economy.
Sathapon Patanakuha, chief executive of SmartContract Blockchain Studio, said the scheme could help to stimulate the economy and improve the country's digital capabilities.
A new digital payment infrastructure could enable the government to promote specific policies and provide subsidies to targeted sectors, such as small and medium-sized enterprises, said Mr Sathapon.
He said the platform's design should be based on vision and use cases, not technology. The architecture can be a mix of blockchain and other technologies, said Mr Sathapon.
The new government should invite existing digital wallets and mobile banking apps to join the digital money scheme, he said.
As a blockchain entrepreneur, Mr Sathapon said he supports projects that promote Thailand's digital capabilities, as increasing digital wallet access should greatly increase the country's potential.
Dome Charoenyost, founder and chief executive of Tokenine Co, said as a blockchain developer, he and industry peers have encouraged the government to promote the adoption of blockchain technology.
"But it has to be an appropriate and cost-effective use case to maximise the benefits of this technology," he said.
Thanachart Numnonda, founder of the IMC Institute, said there are many digital wallet apps, including Pao Tang, that have a large customer base, so there is no need to build a new digital wallet.
The government can transfer the money via Pao Tang and other digital wallet apps by using the country's central database, said Mr Thanachart.
The use of blockchain technology and digital wallets for this initiative could serve as a prelude to CBDC deployment.
In June, the Bank of Thailand initiated a CBDC pilot in partnership with three payment service providers. The country is also progressing towards implementing a national digital ID system, which can be integrated with retail digital wallets.
How can the digital currency be used?
To access the 10,000 baht worth of digital money, people can download an app and link it to their ID card to receive a QR code. People without a smartphone can use their 13-digit ID card number for authentication.
How will the project be funded?
The scheme is estimated to require a budget of 560 billion baht. Part of the budget required for the digital wallet plan is expected to come from government income in fiscal 2024, which is estimated to increase by 260 billion baht. Tax revenue is expected to rise by 150 billion baht for the next fiscal year thanks to stimulus measures.
Another 150 billion baht would come from estimated expenditure needed from Oct 1, 2023 to May 31, 2024 as the fiscal 2024 budget disbursement is expected to be delayed by up to eight months.
"With a massive budget of around 560 billion baht, we believe the mass deployment of digital wallets will be a 'whirlwind' for the economy," Mr Phaophum said.
The party has no current plans to borrow money to finance the scheme, meaning it should not affect the country's financial and fiscal discipline, he said.
When can the money be used?
Mr Phaophum said the party initially expected to implement the digital wallet scheme during the New Year, but the launch must be pushed back because of the delay in forming a new government.
The government expects to launch the scheme in the first quarter of 2024, with efforts to ensure availability by April in time for the Songkran festival to encourage spending, he said.
Additional reporting by Nuntawun Polkuamdee