Thailand’s progress and development of CBDC

Background of the CBDC project

The Inthanon Project is one of the key initiatives in which the BOT, together with other 8 commercial banks, explores the potential of Distributed Ledger Technology (DLT) in developing a digital currency for wholesale transactions (Wholesale CBDC), transforming the financial infrastructure, and fostering the ecosystem to digitally innovate.

With the Inthanon Project as the core foundation, the BOT has further explored and CBDC projects as follows:

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mBridge Project: Development of Wholesale CBDC for cross-border transfers

        The Multiple CBDC Bridge Project (mBridge) is a collaborative project among Bank of Thailand (BOT), Hong Kong Monetary Authority (HKMA), the Digital Currency Institute of the People’s Bank of China (DCI PBC), Central Bank of the United Arab Emirates, and Bank for International Settlements Innovation Hub in Hong Kong. The mBridge platform demonstrated the enhanced efficiency of cross-border transactions using multi-currency CBDC compared to the current system by eliminating the correspondent banking network, resulting in (1) a substantial decrease in cross-border transfer times from 3-5 days to several seconds, (2) enabling direct peer-to-peer linkages between participating banks which can potentially lower the cost of cross-border transactions. Furthermore, the platform can also (3) reduce settlement risk and (4) support the use of local currencies in international payments.
        Going forward, the mBridge project will continue building and testing the technology to improve existing functionalities and add enhanced features to the platform, all the while taking into consideration policy, regulatory and legal implications. Following this, the BOT along with other central banks will consider pursuing experiments in more real-world settings further.

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Retail CBDC: Development of digital currency for the general public

        The BOT has developed Retail CBDC with the objectives to allow the business sector and general public to have greater access to financial innovations under the context of a fully digitized of financial system. The development of Retail CBDC is in line with the direction taken by other central banks.          

        Nonetheless, the development of Retail CBDC may impact service providers, the general public, as well as financial system stability. Therefore, the BOT will proceed with caution and take into consideration the feedbacks from the public and private sectors. So far, BOT has collaborated with Siam Cement PCL and Digital Ventures Limited in 2020 for the testing and has issued a report and public consultation in 2021.

        The development of Retail CBDC is a long-term plan and must be carried out continuously to ensure that it is able to accommodate the rapidly change digital landscape and context. In this regard, the BOT must be confident that preparations are always being made through studies and understanding the models, risks, as well as methods for impact reduction if Retail CBDC were to be widely adapted in the future.