The Bank of Thailand to pilot retail CBDC by the end of 2022
Thailand's Central Bank announces to hold a hackathon in August-September to provide mentorship to selected participants
By Shashank Bhardwaj
The Bank of Thailand (BOT) announced on Friday that it would begin a pilot study of a retail central bank digital currency (CBDC) by the end of this year. On a limited scale, a possible real-life application of the 'Retail CBDC' will be carried out within the private sector. In the announcement on its official website, the Bank of Thailand said, "The BOT will assess the benefits and associated risks from the Pilot to formulate related policies and improve the CBDC design in the future."
The country's goal with this move is to assess how the technology would work in its financial system while studying the associated risks and benefits. The Bank of Thailand is one of the first central banks to investigate the potential of retail CBDC for their financial ecosystem's future. Since 2018, it has been researching Central Bank Digital Currencies (CBDC). The new pilot programme would be in addition to previous wholesale CBDC projects and a proof-of-concept study for a retail CBDC, both of which were funded by private companies.
The pilot is part of a study to evaluate the suitability of technology and design, and it will be conducted on a small scale with a limited number of participants. The pilot has been divided into two tracks. The first is known as the 'Foundation track.' CBDC will be tested in cash-like activities, such as paying for goods and services during this phase. The test will be limited to specific areas and will involve 10,000 retail users. This phase is expected to put the system's efficiency and safety to the test. It will use a Giesecke+Devrient-developed technology. The phase will begin at the end of 2022 and will last until the middle of 2023. The second phase, called the 'Innovation track', will focus on presenting innovative CBDC use cases.
The first phase will feature three major banks: Bank of Ayudhy, Siam Commercial Bank, and 2C2P. The pilot programme will also provide an opportunity for the private sector and the general public to present their use cases for Retail CBDC through a CBDC Hackathon. It will take place from August 5 to September 12, 2022. Mentorship will be provided to selected participants by experienced financial institutions.
According to Vachira Arromdee, Deputy Governor of the Central Bank, the study will match the interest of other central banks, focusing on the development of retail CBDC and its potential impacts across the banking sector. Previously, the BOT authorities said that they “don't use crypto for payments”. The new pilot programme does not include the issuance of Retail CBDC. This is due to the fact that in the case of Retail CBDC, 'the issuance requires thorough consideration' of risks and benefits for the financial system in general.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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