The Bank of Thailand (BOT) has announced that it is extending the scope of its central bank digital currency (CBDC) development efforts. The bank says this next phase will be a pilot phase focused on testing “real-life applications of Retail CBDC” with the private sector.
In the BOT press release, the bank’s deputy governor Vachira Arromdee highlighted that countries around the world are recognizing CBDCs as the foundation of the future financial system, and Thailand will not be left behind in exploring its potential.
Per the release, the retail pilot phase will be divided into two tracks—”Foundation” and “Innovation.” The foundation track will kick off towards the end of 2022 and last until mid-2023. During this time, 10,000 selected retail users will trial cash-like transactions on the platform through three companies, namely the Bank of Ayudhya, Siam Commercial Bank, and 2C2P.
The innovation track will be open to public and private participants and will focus on the programmability of the retail CBDC. The track will feature a “CBDC Hackathon” where participants can develop new use cases for the platform. Interested persons can submit their proposals between August 5 to September 12.
If an applicant’s proposal is selected for the hackathon, they will receive mentorship from one of the financial institutions that participated in the Project Inthanon phase.
The BOT added that the pilot testing is not a confirmation that it will launch the CBDC as it is still studying the benefits and risks associated with the CBDC.
“The BOT reiterates that this Retail CBDC Pilot is part of the study and development of Retail CBDC to assess the suitability of technology and CBDC design. At present, the BOT does not have plans to issue Retail CBDC as the issuance requires a thorough consideration of benefits and associated risks for the financial system,” the release reads.
Thailand advancing with blockchain and digital assets adoption
Thailand began its CBDC project in 2021. Since then, it has completed two rounds of testing. Project Inthanon, which had Phase 1 and 2, introduced the BOT to the retail CBDC.
The second round, Project Inthanon-LionRock, focused on a wholesale CBDC. It was conducted in collaboration with the central banks of Hong Kong and was extended to become the mBridge Project with the participation of China and the United Arab Emirates.
Thailand has also directed significant attention to providing regulatory clarity for digital assets. The government passed a decree to scrap VAT for digital asset transactions till 2024 back in June.
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