The Central Bank of Thailand is now testing its CBDC on large businesses.
The Bank of Thailand’s (BOT) central bank digital currency (CBDC) project is well into the third stage of development.
The assistant governor of the BOT, Vachira Arromdee, added that the project is already being used in corporate financial transactions.
In June, BTCManager reported that the BOT collaborated with Siam Cement Group (SCG), the country’s oldest and largest cement manufacturer, on the creation of a prototype CBDC payment system for businesses. The CBDC pilot project is slated to run for one year, which began this month.
Arromdee conceded that while the CBDC may have an adverse effect on commercial banks due to the elimination of intermediaries, a digital payment platform would help lower the cost of financial transactions.
The assistant governor also revealed that the central bank is working with the Hong Kong Monetary Authority (HKMA) to implement the CBDC for transactions later this September 2020. The two entities signed a memorandum of understanding (MoU) earlier in May 2019 to start collaborating on fintech innovations.
The third phase of Thailand’s work on CBDCs will involve the use of their new currency in large businesses. In the fourth stage, the digital currency will start being used among retailers.
However, Arromdee explains that the bank plans on conducting an extensive study before fully implementing the next stage.
“After that, we plan on moving into the fourth phase by expanding to retailers, but this phase will require a cautious study of both pros and cons. By moving into the retail market, [CBDC] could lead to a major disruption of the overall financial market and financial stability, while the role of financial institutions could be changed.” Arromdee said.
Arromdee also revealed that the bank is concerned about the public use of CBDC through e-wallets, explaining that they will carry out more research on this feature as well as its effect on financial stability.
Central banks around the world have looked into the use of digital currencies. China remains a step ahead with its development in the digital yuan, and recent news has revealed that the central bank of China has secured a partnership with local food delivery service provider Meituan Dianping for the trial of their CBDC.
Japan is also working on research for a digital yen, with the national government revealing that it is considering the inclusion of the CBDC in its 2020 fiscal policy. South Korea’s central bank has also created a committee to review the potential regulatory hurdles for its project.