Thailand is currently in its third developmental phase of building its central bank digital currency (CBDC), a local newspaper, and Nation Thailand reported on Thursday. The paper stated that the Assistant Governor of the Bank of Thailand, Vachira Arromdee, who said the bank is already rolling out its CBDC to large companies.
The Bank of Thailand recently announced its plans to develop a prototype digital payments system, integrating the CBDC in an aim to keep up with the developments across Asia in China and Japan. According to the report, the launch of the CBDC will be followed by a partnership with Hong Kong in the latter part of 2020, to integrate the countries’ digital payment systems.
A Closer Look at Implementing a CBDC
Vachira stated that digital currencies have yet to affect the financial market in the country, despite the increasing use of these assets. She further explains that blockchain technology and digital payment systems are impactful in reducing the cost and speed of transactions – improving the financial system.
Conversely, sustained growth of the digital asset market could present challenges to the traditional financial system by replacing banks as middlemen in the system. To avoid this, Vichira calls for a comprehensive study before the implementation of a ‘digital baht.’
“The central bank is also thinking about expanding the use of the cryptocurrency to the general public, but a comprehensive study must be completed before taking such action.”
The digital baht will be backed by government-owned assets such as international reserves and precious metals. In essence, the digital baht will resemble a stablecoin rather than China’s, Russia’s, or Japan’s CBDC, which is to be issued by the central bank directly.
Thailand’s government is further looking into the use of digital wallets and electronic wallets jointly with a decision to be made on whether or not to use them.
The spread of CBDC development fever is on a trail across Asia following the announcement of similar projects in China and Japan recently. While China’s motives in developing a digital yuan have been in the works for the past few years, Japan’s recent interest in developing a digital yen raises a few eyebrows.