Bank of Thailand launches retail CBDC pilot

Bank of Thailand’s pilot will ensure its CBDC is specifically suitable for the Thai context

Bangkok, Thailand                                 
The global push to research and develop CBDCs continues – Photo: Shutterstock

The Bank of Thailand has announced its intention to propel its retail central bank digital currency (CBDC) study into the pilot phase. 

Deputy governor Vachira Arromdee said that central banks around the world are investigating the potential of retail CBDCs to become the “foundation of the future financial system”. 

The bank stated: “In addition to previous Wholesale CBDC projects and Proof-of-Concept Retail CBDC testing with corporates, the BOT deems it necessary to extend the scope of Retail CBDC development to a Pilot phase in which real-life application of Retail CBDC will be conducted in cooperation with the private sector within a limited scale.”

Wholesale CBDCs are for use by regulated financial institutions. They are designed to be used for the settlement of interbank transfers and related wholesale transactions, such as settling payments between financial institutions. 

By contrast, retail CBDCs make central bank-issued digital money available to the wider populace, in a manner akin to cash. 

The pilot phase will test the real-world application of a retail CBDC, in conjunction with the private sector, to help the central bank develop its future strategy. 

Foundation and Innovation tracks

The pilot will be split into two tracks, a Foundation and an Innovation track. The former, with around 10,000 users, will test the use of a CBDC as payment for goods and services, and will last from the end of this year until mid-2023. 

The Innovation track, meanwhile, will research new financial services to meet the needs of users and ensure that the central bank’s work is suitable in the specific context of Thailand and the Thai economy. 

Advocates of CBDCs globally have argued that the technology can help ensure governments and central banks do not lose ground to decentralised or private sector digital currencies. Furthermore, supporters have hailed CBDCs’ capacity for reducing illicit activity. 

Critics, on the other hand, have raised concerns about the threat to privacy posed by replacing physical cash with a form of payment that is administered and tracked by the state. 

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