The Bank of Thailand (BOT) is ready to deploy its central bank digital currency (CBDC) to local corporations as part of the third phase of the project’s development.
BOT Launches Third Phase of its Digital Currency Project
Thailand’s central bank has stepped into the third phase of development of its digital currency, according to The Nation Thailand, which cited BOT assistant governor Vachira Arromdee.
BOT has started to use the digital currency for financial transactions with some big companies, she said. In September, the central bank will use the CBDC for transactions with the Hong Kong Monetary Authority (HKMA). Vachira added:
“The central bank is also thinking about expanding use of the cryptocurrency to the general public, but a comprehensive study must be completed before taking such action.”
She mentioned that the digital currency might negatively influence commercial banks by hurting demand for intermediaries in financial transactions. Nevertheless, the CBDC would cut the costs of transactions. The official mentioned China, stating that the public use of digital currency had not troubled the financial system.
While CBDCs were initially referred to as central bank-issued cryptocurrencies, they have more in common with digital fiat money than with Bitcoin. Nevertheless, they are powered by a permissioned version of blockchain.
BOT’s digital currency will be backed by tangible assets, like Thailand’s international reserve. Thus, it will behave like a stablecoin pegged to a basket of currencies and other assets.
As for the broad use of CBDCs through digital wallets, BOT considers this move too hazardous right now. The central bank has to ponder the pros and cons and the impact on financial stability.
However, businesses are ready for adoption. Thakorn Piyapan, head of the Krungsri Consumer Group, would welcome the wider use of the BOT digital currency. He said it would encourage mobile banking and cut the cost of printing and using banknotes.
Asian Countries Could Lead CBDC Adoption
Even though more central banks showed interest in CBDCs, China has advanced the most in this area. On Wednesday, CryptoPotato reported that China’s CBDC would be tested on a platform operated by a Tencent business operating a food delivery network.
Now with Thailand doing concrete steps, it seems that the Asian countries would become leaders of CBDC adoption.
BOT has officially announced the intention to build a prototype of a CBDC payment system for businesses in mid-June.
The central bank has already successfully tested the wholesale funds transfer through CBDCs in January of this year as part of the Project Inthanon, which involved eight financial institutions.