The Future of Thai Finance
Tokenization
Tokenization is the process of converting assets, such as money or financial assets, into digital tokens so that transactions can be programmed and automated. This allows financial systems to operate with greater efficiency and unlocks new capabilities across the digital economy. The Bank of Thailand views tokenization as an opportunity to elevate the overall financial system, and continuously researches and develops tokenization to foster innovation and maintain financial stability, building a solid foundation for the future digital economy.
1) Promoting Payment System Interoperability
Bridging fragmented networks. The private sector is increasingly developing its own tokenized payment systems using Distributed Ledger Technology (DLT) to improve payment efficiency. However, there is currently no trusted and secure mechanism for connecting payment systems built on different technologies across providers (technology-agnostic interoperability), whether between different DLT networks or with existing central infrastructure such as RTGS. To address this, the Bank of Thailand launched Project San to enable payment systems built on different technologies to transact with one another. This helps unlock the full potential of tokenization, supports further financial innovation, improves efficiency, and reduces payment risk for businesses and the public.
1.1 Project San
Project San is a research and development project that built a prototype system to support tokenized payments for domestic transactions. It includes a connecting mechanism that allows payment systems using centralized technology and those using Distributed Ledger Technology (DLT) to transact with each other. Test results showed that the prototype could connect service providers' systems and process tokenized transactions end to end without interruption, with fast processing, high throughput, and network scalability to support more provider networks.
Timeline
2) Cross-Border Collaboration
Scaling interoperability globally. Domestic connectivity is only the first step. To support a truly borderless digital economy, the Bank of Thailand are testing how our Interoperability Layer (IL) can communicate with the financial infrastructures of other jurisdictions, aiming to explore ways to reduce the cost, time, and complexity of international trade and settlement.
2.1 San x Ensemble Project
The Bank of Thailand partnered with the Hong Kong Monetary Authority (HKMA) to develop and test a prototype payment system that connects and supports cross-border tokenized payment and asset delivery transactions. It includes a connecting mechanism that allows payment systems using centralized technology and those using Distributed Ledger Technology (DLT) to transact with each other.
2.2 Meridian FX APAC
The Bank of Thailand partnered with the Bank of England (BoE) and the Monetary Authority of Singapore (MAS) to develop and test a prototype payment system for synchronized foreign exchange (FX) settlement. This approach aims to improve efficiency and reduce settlement risk in FX transactions, while supporting the development of new financial innovations, particularly tokenized transactions.
FAQ
Tokenization means representing money or assets as digital tokens on a programmable ledger, so that value and ownership can move and settle together. The problem is that each institution or country tends to build its own ledger. Without interoperability, these become isolated networks, so the work focuses on connecting different infrastructures rather than forcing everyone onto one platform.
An internal BOT initiative started in June 2024 to build and test a prototype tokenization ecosystem. It covers three parts: a wholesale settlement engine, EVM-compatible ledgers supporting tokenized deposits, and an interoperability layer (IL) used to facilitate settlement between three networks.
BOT and the Hong Kong Monetary Authority are exploring cross-border tokenization use cases under Project San and Project Ensemble testing Payment versus Payment and Delivery versus Payment settlements, including trade payments and carbon credits. The core of the work is a proof of concept testing interoperability between two separate settlement infrastructures.