Thailand’s central bank is asking for public comment on its project to launch a sovereign digital currency in the next five years.
The Bank of Thailand has set its agenda for a retail central bank digital currency with preliminary testing protocols scheduled to begin in the second quarter of 2022.
Thailand’s central bank made this known in a press release issued on Friday asking for public comment on the proposed roadmap for the CBDC.
Thailand’s central bank warns of ‘illegality’ of THT stablecoin
As part of its plans, the central bank released a preliminary report detailing its CBDC thesis. Explaining its motivation for creating a CBDC, the bank argued that the success of private stablecoins poses risks to “monetary sovereignty and financial stability.”
In fact, in March, Thailand’s main bank deemed Thai Baht Digital (THT), a stablecoin issued by Terra, to be illegal. At the time, the central bank cited the country’s law that prohibits any other entity except the central bank from issuing currency in Thailand.
According to the Bank of Thailands report, the central bank will begin its CBDC development efforts by engaging with stakeholders, followed by a cost-benefit analysis to determine opportunities, risks, and challenges associated with a sovereign digital currency.
Major Asian Banks Come Together to Create Cross Border CBDC
For the BoT, the “flight to quality” – that is, consumers preferring CBDCs to fiat currency during market disruptions – remains a significant risk factor. Therefore, the central bank is proposing the addition of withdrawal limits among other transaction friction protocols to reduce the possibility of bank runs when periods of uncertainty arise in the market.
As part of its preliminary conclusion, the BoT revealed that it was leaving the door open for a CBDC, hence the reason for putting its digital baht testing protocols in place.
Speaking during Friday’s briefing, Vachira Arromdee, assistant governor of the financial markets operations group at the BoT, said the central bank sees CBDCs as a means of providing greater access to financial services in the country.
According to Arromdee, the digital baht project could be implemented within the next three to five years. Members have until June to submit comments on the bank’s plans to create a CBDC.
The DCash digital currency of the Central Bank of the Eastern Caribbean enters circulation
As Cointelegraph previously reported, the BoT is also part of a CBDC coalition involving Hong Kong, China, and the United Arab Emirates. In fact, regional CBDCs are becoming a notable trend in the emerging sovereign digital currency ecosystem as participants look towards cross-border interoperability.
The Eastern Caribbean Central Bank recently launched a regional CBDC for four of the eight nations of the Eastern Caribbean Monetary Union.
Keep reading:
Thailand’s central bank warns of ‘illegality’ of THT stablecoin
Major Asian Banks Come Together to Create Cross Border CBDC
The DCash digital currency of the Central Bank of the Eastern Caribbean enters circulation
Hong Kong and China test cross-border digital yuan, says People’s Bank of China official
Thai bank’s venture arm invests in institutional crypto custodian Anchorage
Bitcoin manages to overcome last resistance and Ethereum returns to $ 2,000
