The Central Bank of Thailand (BOT) recently released a public statement stating that it deems it necessary to extend the scope of Central Bank Digital Currency. Hence, the bank plans to conduct tests on retail CBDC on a limited scale with select participants and warns the public to be cautious of frauds and scams claiming to provide retail CBDC-related services or investments.
Claiming to be “among the first central banks to recognize the importance of CBDC as a novel financial infrastructure,” BOT suggested that it will venture further into retail CBDC development to a pilot phase in which real-life application of retail CBDC will be conducted in cooperation with the private sector within a limited scale.
Vachira Arromdee, the deputy governor of the BOT, noted, “Central banks around the world have focused closely on the development of retail CBDC and see the potential of retail CBDC as being the foundation of the future financial system.”
BOT to Assess Suitability of Technology and CBDC Design
BOT’s CBDC pilot phase is divided into two parts: the foundation track and the innovation track. The testing of the foundation track will begin at the end of 2022 and last until mid-2023.
For the foundation track test, BOT said that “CBDC will be used in conducting cash-like activities, such as paying for goods and services, within limited areas and scale of approximately 10,000 retail users selected by the BOT along with three companies, namely the Bank of Ayudhya Public Company Limited, Siam Commercial Bank Public Company Limited, and 2C2P (Thailand) Company Limited.”
Meanwhile, the innovation track test of the retail CBDC will help the BOT develop and improve the design of CBDC to suit the Thai context in the future. The BOT plans to allow the private sector and the public to participate in presenting business use cases for retail CBDC via a “CBDC Hackathon.”
On the Flipside
- The BOT said that, at present, it does not plan to issue retail CBDC as the issuance requires a thorough consideration of benefits and associated risks for the financial system.
- The deputy governor of the Bank of England recently said that it could be five or more years before digital pounds are available to consumers, reported a media giant.
Why You Should Care
Recently a big media house reported that countries like Russia, Malaysia, South Korea, and Saudi Arabia are also developing the CBDC pilot phase.