TL;DR: The Bank of Thailand is partnering with three payment service providers to introduce a retail central bank digital currency (CBDC), aiming to enhance convenience and efficiency in financial transactions while reducing costs. The pilot testing phase will involve thousands of participants and offer various use cases for the digital currency.
Bank of Thailand Collaborates with three Payment Service Providers to Launch Retail CBDC
The Bank of Thailand, the central bank of Thailand, is partnering with three payment service providers, Bank of Ayudhya (Krungsri), Siam Commercial Bank (SCB), and 2C2P (Thailand) Co, to launch a retail central bank digital currency (CBDC). The initiative aims to enhance the convenience and efficiency of financial transactions while reducing costs. The testing phase in a regulatory sandbox is scheduled to take place from June to August.
Bank of Ayudhya, branded and commonly referred as Krungsri, is one of the first financial institutions to launch the pilot trial of the retail CBDC, named CBDC Krungsri. Initially, the bank invited its employees and approximately 100 nearby merchants to participate, with a target of 2,000 staff members joining the pilot project.
Krungsri is the fifth largest bank in Thailand in terms of assets, loans, and deposits. Participants in the CBDC Krungsri project are required to install a mobile banking app, create an e-wallet, and transfer funds into the digital currency called “digital baht,” where one CBDC is equivalent to one baht.
Payments for goods and services can be made at participating stores by scanning a QR code. The bank has focused on stabilizing the payment system during peak periods and has not set a limit on transaction value. The successful implementation of the service could alleviate the transaction load on the PromptPay service during high-demand periods.
In addition to retail transactions, the retail CBDC could be utilized for state welfare payments, similar to existing apps like Pao Tang or specific loan programs.
The Bank of Thailand aims to differentiate the retail CBDC from the PromptPay service and believes that the adoption of the digital baht will benefit the country’s digital economy in the long run.
Since the CBDC is digital, there is no need to produce physical coins and notes, potentially reducing costs associated with supplying physical currency to the economy.
Additionally, Siam Commercial Bank has initiated its pilot project called CBDC SCB wallet, which is available for participation by both bank staff and nearby merchants.
The Bank of Thailand has set a target of engaging approximately 10,000 participants in total for the testing phase of the retail CBDC.