If you can’t beat them, join them. Unable to control the growing popularity and adoption of cryptocurrencies, which mostly remain outside of the purview of central banks and other regulatory authorities, it seems that central banks across the globe are gradually opening up to embrace the phenomenon. The latest to explore launching its own cryptocurrency is the Bank of Thailand (BoT). (See also: Can Bitcoin Kill Central Banks?)
The Thai central bank has announced joining hands with technology partner R3 and eight financial institutions to create a digital currency called the Central Bank Digital Currency (CBDC). It will be based on Corda, a distributed ledger technology (DLT) platform developed by the enterprise-focused tech company R3, which has extensive experience in leading and consulting DLT projects and implementations.
The partnering firms include influential names of the Thai financial markets: Bangkok Bank Public Company Ltd., Krung Thai Bank Public Company Ltd., Bank of Ayudhya Public Company Ltd., KasikornbankPublic Company Ltd., Siam Commercial Bank Public Company Ltd., Thanachart Bank Public Company Ltd., Standard Chartered Bank (Thai) Public Company Ltd., and HSBC (HSBC).
Collaborating on Project Inthanon
The initiative is named Project Inthanon and will be implemented in phases. During the initial phase, the project will explore the implications and the potential benefits of DLT to enhance efficiency of Thai financial market infrastructure. All partnering entities will collaborate to design, develop and test a proof of concept (POC) prototype that will support wholesale funds transfers by using CBDC tokens. The first phase is expected to be completed by early 2019 and will also involve testing features like liquidity saving mechanism and risk management associated with payments processing.
The necessary insights and outcome from phase one will help guide the future course of the project, which is being explored to reap the benefits offered by DLT technology and digital currency to support interbank transactions. Future phases of the project will test capabilities for broader use like cross-border and third-party funds transfers.
The Thai central bank revealed the initiative in June and joins the league of other central banks, like the Bank of Canada and the Hong Kong Monetary Authority, which are exploring DLT technology to support interbank and cross-border transactions.
Additionally, the BoT is conducting a separate DLT proof of concept to enhance the operational efficiency for scripless government savings bond sales.
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