The Bank of Thailand released a report outlining the outcome of its retail central bank digital currency (CBDC) pilot. The pilot was successful and it provided evidence that a retail CBDC would promote innovation, however, there is no immediate plans to release its CBDC known as digital baht. The plan is to set up a sandbox for enable private programmable payments and tokenization.
According to the report, Thailand’s payment landscape is undergoing rapid and continuous transformation. As outlined in the Bank of Thailand (BOT)’s “Directions for Development of Payment Systems Under the New Financial Sector Landscape of Thailand” paper issued in September 2022, the BOT has been continuously studying and testing the feasibility of a Central Bank Digital Currency (CBDC) and related considerations. The BOT has also been exploring the potential of CBDC in both wholesale and retail domains, with the Retail CBDC Pilot Program marking the latest milestone achieved by the country.
The report noted, Central banks around the globe have continuously initiated and developed CBDC projects, with over 93% of central banks being engaged in some form of CBDC work as of 2023.1 For Thailand, the BOT embarked on its CBDC journey since 2018.2 Our ongoing Wholesale CBDC project, Project mBridge, focuses on using CBDC for cross-border payments to reduce the associated with these transactions. Additionally, the BOT initiated its Retail CBDC study in 2022 and successfully completed a pilot test in 2023, to assess the underlying technology’s capacity to serve as a supportive infrastructure for new financial innovation. The BOT anticipates that the results from the pilot will serve as invaluable input for further development of the payment infrastructure in Thailand, benefiting both financial institutions and the general public in the future.
In this report, we summarize our Retail CBDC Pilot Program, including the use cases and key findings. The pilot took place during late 2022 to October 2023 in a pre-defined environment, involving selected financial service providers (FSPs), users and merchants. The design and scope of the pilot were driven by four intended outcomes, namely
(1) to assess the technological readiness and fundamental functions of Retail CBDC,
(2) to evaluate the potential of Retail CBDC for harnessing financial innovation by exploring use cases that extend beyond the capabilities of the current payment infrastructure,
(3) to explore whether the CBDC infrastructure can securely facilitate open access for both bank and non-bank entities, and
(4) to determine whether Retail CBDC can serve as an alternative payment infrastructure in the retail payment sector for individuals and businesses.
Read full report at https://www.bot.or.th/content/dam/bot/documents/en/financial-innovation/cbdc-digital-currency/rCBDC%20Conclusion%20Report.pdf