The Bank of Thailand Is Testing Its CBDC with Large Corporations
The Bank of Thailand’s central bank digital currency (CBDC) project has progressed into its third phase of development.
Vachira Arromdee, deputy governor of the Bank of Thailand (BOT), said the initiative is already being used for corporate financial transactions.
In June, BTCManager reported that the BOT had partnered with Siam Cement Group (SCG), the country’s oldest and largest cement producer, to build a CBDC payment prototype for business use. The CBDC pilot, designed to run for one year, began this month.
Arromdee acknowledged that the CBDC could negatively affect commercial banks by cutting out intermediaries, but stressed that a digital payment platform would substantially reduce transaction costs.
He also disclosed that the BOT is collaborating with the Hong Kong Monetary Authority (HKMA) on cross-border CBDC applications. The two institutions signed a memorandum of understanding in May 2019 to cooperate on fintech innovations, and they have continued discussions about using CBDCs for future transactions.
The third phase of Thailand’s CBDC program focuses on adoption by large enterprises. The fourth phase will expand usage to retailers.
However, Arromdee emphasized that the central bank will conduct a thorough study before moving fully into the next stage.
“After that, we plan to move to the fourth phase by extending to individuals, but this phase requires careful study of the pros and cons. Moving to the retail market could cause major disruption to the overall financial market and financial stability, and the role of financial institutions could be altered,” Arromdee said.
He added that the BOT is particularly concerned about public use of CBDC through e-wallets and will carry out further research on this feature and its implications for financial stability.
Central banks worldwide are exploring digital currencies. China remains ahead in developing a digital yuan and has reportedly partnered with local food delivery platform Meituan Dianping for CBDC trials.
Japan is also researching a digital yen, with the national government indicating it may include a CBDC in its fiscal policy deliberations. The Bank of Korea has formed a committee to examine potential regulatory hurdles for its CBDC project.
Translated by Carolane de Palmas