Thailand’s central financial institution, the Bank of Thailand (BoT), had announced in June that it was exploring a “new way of conducting interbank settlement” by issuing its own cryptocurrency. The BoT appears to have followed up on this plan as its now reportedly working on creating a Central Bank Digital Currency (CBDC).
According to an August 21st press release, the BoT will partner with R3, a New York-based blockchain startup, and 8 other local banks to “collaboratively design and develop a proof-of-concept prototype” for its CBDC.
R3’s open-source distributed ledger (DLT) platform will be used to implement the CBDC prototype and the new payment system will aim to facilitate “wholesale funds transfer.”
Improving Future Financial Infrastructure
Thailand’s digital currency initiative is called Project Inthanon and its “outcome and insights...will contribute to the design of [the nation’s] future financial infrastructure”, the press release stated.
Notably, the Inthanon project will be similar to other state-backed digital currency projects currently being developed by the Hong Kong Monetary Authority, the Monetary Authority of Singapore, and the Central Bank of Canada.
The press release also noted that the BoT is working on a DLT-based proof-of-concept for securities trading that does not require issuing or exchanging physical certificates. These types of transactions will reportedly be conducted through the sale of “scripless government savings bonds.”
Moreover, phase 1 of the Inthanon project will involve developing and testing a CBDC prototype for “domestic wholesale funds transfer.” During this initial phase, the project’s participants will also be working on improving “key payment functionalities such as [the] liquidity saving mechanism and risk management.”
Faster Cross-Border, Third-Party Funds Transfer
Phase 1 of Thailand’s CBDC project is scheduled to be completed by Q1 2019 and its “findings and outcomes” will be used further enhance the capability of the digital currency prototype to allow for more efficient cross-border payments and third-party funds transfer.
The 8 other banks working with BoT and R3 on Thailand’s digital currency project include the Hongkong and Shanghai Banking Corporation, Siam Commercial Bank, Standard Chartered Bank (Thai), Bangkok Bank, Krung Thai Bank, Bank of Ayudhya, Kasikornbank, and the Thanachart Bank.
Looking at these developments suggests that Thailand’s government believes digital currencies have to the potential to “enhance the operational efficiencies” of its traditional financial system. As CryptoGlobe reported on August 5th, Thailand’s banks were given permission to launch subsidiaries in order to offer brokerage services to crypto-related firms and also invest in blockchain startups.
Earlier in June, Thailand’s Securities and Exchange Commission (SEC) legalized the buying and selling of seven cryptocurrencies using the Thai baht. These cryptos include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Stellar (XLM), and Ripple (XRP).