The Bank of Thailand (BoT) on Tuesday unveiled plans towards the completion of the first phase of its cryptocurrency pilot program; a Central Bank Digital Currency (CBDC) initiative termed Project Inthanon by March 2019
A CBDC refers to digital currency/token issued by central banks whose legal tender status relies on government regulation or law. There exists a ‘wholesale CBDC’ which is limited to use by financial institutions cum markets; and the ‘retail CBDC’ for the general public.
The BoT is said to have partnered 8 participating banks for the CBDC project which will run on CORDA; the R3’s distributed ledger technology (DLT) platform; designed to work within the financial service sector to provide data security and restriction to required participants only.
Explaining further, the BoT reiterated that the CBDC project ultimately aims at enhancing decentralized domestic funds transfer within the nation’s inter-banking system with the issue of CBDC tokens, improve efficiency of the Thai financial market structure, explore the potential of blockchain in enhancing cross-bank transactions and raise the Thai financial sectors readiness to adopt disruptive technologies for operational efficiency.
In its official release, the BoT expects the first phase of the project to be completed by Quarter 1 of 2019 with a review and documentation of the project to be published subsequently. Furthermore, it stated;
Building upon findings and outcomes from phase 1, the project participants will look to develop extensively the capabilities of the project prototype in a bid to access other functions like third party funds transfer and cross border funds transfer.
In addition to Project Inthalon, the BoT also made public its intent to employ the DLT platform in other projects especially a DLT project to boost the operational efficiency of government bond sales.
With the launch of Project Inthanon, the Bank of Thailand joins the growing list of National Central Banks who have experimented the DLT system including the Bank of Canada, Hong Kong Monetary Authority and the Singaporean Central Bank which had in June 2017 revealed that it had successfully issued digital tokens of its national currency using a private Ethereum blockchain.
As the CBDCs continue to attract widespread interest and divided opinions across the world banking sector, analysts opine that efforts to develop wholesale CBDCs will increase with financial institutions looking to explore its potential benefits. Also Thailand looks set to embrace the blockchain and cryptocurrency impact as it unravels new legislation and breakthrough attempts; notably the recent Thai SECs approval of seven cryptocurrencies and approved exchange licenses as a pointer to Thai interests in the crypto sphere.