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The Thai central bank has said that it will continue to push for a central bank digital currency (CBDC) but added that it may take another five years to be deployed.
The news that the Bank of Thailand (BoT) is continuing its pursuit of a CBDC was published by a local media outlet, The Bangkok Post. The agency reported that the BoT is continuing to research and develop its CBDC but needs to “ensure it offers additional benefits to the financial system with good risk management.” Many banks, including the BoT, have developed retail CBDCs, but none have implemented the currency in the market. Central bank governor, Sethaput Suthiwartnarueput, said global retail CDBC development is however expected to take another five years before a market launch can take place. The governor added that the BoT wants to better understand the risks and benefits of a retail CBDC, including whether there are benefits with regard to PromtPay, Thailand’s digital payment infrastructure system, and added that the BoT is yet to see any such benefits.
CBDC Pilot Set to Launch
The central bank is currently collaborating with Siam Commercial Bank, Bank of Ayudhya, 2C2P (Thailand) Co, and around 10,000 retail users to test CBDC with real-life applications. The pilot project has two legs: foundation and innovation.
The foundation aspect entails that the CBDC be used to conduct cash-like activities such as paying for goods and services. Testing of this aspect is expected to start at the end of 2022 and will run through mid-2023. In terms of the innovation track, it will focus on programmability and will facilitate the development of use cases for CBDCs. The BoT is also progressing in the development of a wholesale CBDC as part of the Multiple CBDC Bridge (mBridge) project which is expected to facilitate cross-border payment areas. The Bangkok Post reports that the BoT together with the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People’s Bank of China, and the BIS Innovation Hub Hong Kong Center completed the first pilot test using a CBDC as part of mBridge. mBridge tested three different transactions – issuance and redemption of the CBDC between central banks and commercial banks, cross-border exchanges in foreign currencies between commercial banks, and cross-border payments in local currencies. Using mBridge, cross-border transactions will take a few seconds to be processed instead of three to five days.
In Project mBridge, 20 banks in Hong Kong SAR, Thailand, China and the United Arab Emirates used the platform to conduct 164 payment and foreign exchange transactions totalling over $22 million. Read the report: https://t.co/dzQCxz9UYL @hkmagovhk @bankofthailand #CBDC pic.twitter.com/tWwhMszSGC— Bank for International Settlements (@BIS_org) October 26, 2022
Thailand Tightens its Crackdown on Crypto
While it has been decided that a CBDC will soon launch, Thailand has been cracking down even more than before on cryptocurrency regulations. In September the Securities and Exchange Commission (SEC) of Thailand announced that it would be strengthening the rules surrounding cryptocurrency companies in an effort to protect retail investors in the wake of the ongoing crypto winter. The SEC, therefore, made the decision that advertisements for virtual tokens must now include clear and visible warnings regarding the risks of investing in digital assets. It added that advertising terms must also be given to regulators.
Later in the month, the SEC moved to ban local cryptocurrency firms from providing staking and lending services to their customers with the aim to protect traders and their customers from the risks inherent to such activities.
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