Don’t Expect a Thai CBDC Soon
Bank of Thailand officials reschedule pilot program for late 2022
Bank of Thailand; Source: Shutterstock
key takeaways
- Officials from the Bank of Thailand recently announced that they plan to reschedule the first pilots for their CBDC initiative to late 2022
- Unlike Japan, which has accelerated CBDC efforts as part of a geopolitical posturing in the face of China’s own eCNY, or Russia which fears it might be cut off from SWIFT, Thailand doesn’t have the same need to expedite efforts
Thailand will be taking a slow and steady approach to the implementation of its Central Bank Digital Currency, according to a recent report by Reuters. It’s unlikely to see a Thai CBDC rolled out next year.
Officials are now saying that tests for the digital baht — originally scheduled during the second quarter of the year — will actually take place in late 2022.
Deputy central bank director Kasidit Tansanguan said the nation would proceed slowly in developing a CBDC “to ensure efficiency and prudence” and he emphasized the point of a retail CBDC isn’t to compete with crypto or stablecoins — mediums that the bank doesn’t support for payments given their “inherent risks.”
Reuters reported the pilot will trial deposits, withdrawals and transfers across a user base of 10,000 beta testers.
Why does Thailand want a CBDC?
In a whitepaper published by the Bank of Thailand in April 2021, the bank explains that it intends to create a CBDC to provide Thai citizens with a “reliable form of digital currency” citing the transnational nature of existing digital currencies as a problem for tax enforcement, foreign-exchange rules and all around financial stability.
The paper also cites improving cross-border remittances — the Bank of Thailand is participating in research with central banks in Hong Kong, China, and the UAE — as well as cracking down on money laundering as secondary reasons for developing a CBDC.
But these reasons don’t convey the same sense of urgency as what’s going on in China, Japan, and Russia.
In the case of China, the People’s Bank of China is concerned that too much control of the money supply is in the hands of mobile payment platforms WeChat Pay and AliPay — a uniquely Chinese problem as Thailand is still a cash-heavy society despite some moves toward reducing reliance on cash with bank-sponsored digital payment platforms.
For Japan, Tokyo believes that a successful Chinese CBDC will threaten US dollar hegemony (despite this not currently being a goal of the PBoC) and thus disrupt the economic status quo in Asia. In order to not be caught flat-footed, politicians are pushing for Japan to accelerate its own CBDC development in order to keep the yen competitive should a digital CNY be successful.
Russia certainly has the most pressing case for a CBDC with a potential invasion of Ukraine likely to spark retaliatory sanctions from the West, which might involve disconnecting Russian banks from the interbank settlement network known as SWIFT. As Blockworks previously reported, the Bank of Russia has ordered its digital ruble project to be accelerated in order to have a trial candidate ready for mid-2022.
The Bank of Thailand has officially said that it does not support the use of cryptocurrencies, such as bitcoin and ether, as payment for goods and services due to what it perceives as the inherent risks involved in the medium. However, local stakeholders are hoping this will change now that Siam Commercial Bank (SCB), the nation’s largest bank, has bought a controlling interest in Thai exchange Bitkub.
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