The Bank of Thailand (BoT) wants to create a wholesale Central Bank Digital Currency (CBDC) in the country. It would be based on the R3 Corda platform and the BoT has already partnered with eight financial entities for the project, including Siam Commercial Bank, HSBC, Standard Chartered Bank, Bangkok Bank Public and Krung Thai.
According to a press release (in pdf) from the bank, it considers the project, with a working title of “Project Inthanon,” to be a “collaborative milestone” for all institutions involved. The banks will collectively design and develop the wholesale CBDC prototype, expected to be ready sometime during the first quarter of next year. Project Inthanon is designed to “enhance efficiency of the Thai financial market infrastructure” and assist in its future evolution.
In addition to the project, the BoT is reportedly also working on a distributed ledger technology proof of concept that would be used for a sale of scripless government savings bonds in order to “improve operational efficiency.”
There are two types of CBDC options available. One is a retail CBDC, which is designed for the general public, and a wholesale CBDC, which is intended strictly for financial markets and institutions.
CBDCs have continued to attract a lot of attention, while at the same time creating rifts, in the banking sector. Mark Carney, governor of the Bank of England (BoE), has said he is open to considering a CBDC, but states that it won’t happen anytime soon. Across the Atlantic, Canadian authorities recently conducted a CBDC study and determined that “financial inclusion does not provide a compelling motivation for CBDC in most advanced economies, including Canada.”
Last April, during the Deconomy conference held in South Korea, R3 Research Director Anthony Lewis asserted that there will be an increase in the development of wholesale CBDCs this year as more institutions began to recognize the benefits of a bank-issued digital currency. His prediction has yet to be fulfilled.
At the same time, retail CBDCs shouldn’t be expected, either. The Bank for International Settlements (BIS), which has often spoken out against cryptocurrency, said that “a general purpose [retail] CBDC could give rise to higher instability of commercial bank deposit funding.” The opinion was seconded by Carney in May. As has repeatedly been the case, their rhetoric emphasizes the credibility of digital currency and shows that traditional financial institutions are concerned that their “business model” is threatened by cryptocurrency. Both the BIS and the BoE are correct—it does threaten their business model and that’s the whole point of crypto.