Thailand
Thailand: BoT details blueprint for digital currency
The Bank of Thailand plans to test its Retail Central Bank Digital Currency (Retail CBDC) in next year’s second quarter, allowing all related parties to participate in the testing process.
The central bank studied and surveyed Retail CBDC implementation with all stakeholders, including consumers, financial institutions, merchants, the government sector and others.
Based on the results of the study and survey, the central bank established guidelines for the development and testing of Retail CBDC as a pilot project on two tracks: foundation and innovation.
Under the foundation track, the central bank plans to test and evaluate the use of Retail CBDC in conducting cash-like activities to a limited extent, such as acceptance and conversion of the unit, as well as using it to pay for goods and services. This phase of testing is expected to begin in the second quarter of 2022, said Vachira Arromdee, assistant governor of the central bank.
Ms Vachira said the innovation track will evaluate the ways in which CBDC can be developed for innovative use cases by allowing the private sector and technology developers to participate.
The central bank is considering the format and criteria for participation in both tracks, she said.
Ms Vachira said the study results show for the design and development of Retail CBDC to maximise its potential, the CBDC must not adversely affect monetary policy transmission, financial institutions or overall financial stability.
To benefit all related stakeholders and the country’s financial system, Retail CBDC will be cash-like and non-interest bearing, with intermediaries such as financial institutions the distributors to the general public, she said. Conditions or limits for converting Retail CBDC need to be established, said Ms Vachira.
These guidelines are to ensure Retail CBDC does not compete with deposits or cause a run on financial institutions, preserving the role of intermediaries in collecting deposits and providing credit as well as managing liquidity in the overall financial system, she said.
“If Retail CBDC does not offer depositors interest rates, it can attract consumers with other benefits, including convenience, speed, security and other innovative features. Retail CBDC can be a financial option, but its popularity in the future will depend on consumer demand,” said Ms Vachira.
The central bank predicts public demand for Retail CBDC will gradually increase over time, making it an alternative payment option as a substitute for cash and e-money.
Source: https://www.bangkokpost.com/business/2168099/bot-details-blueprint-for-digital-currency