The Bank of Thailand (BOT) has announced plans to assess the risks and benefits of setting up policies and enhancing the Central Bank Digital Currency (CBDC). As revealed, the BOT aims to expand the scope of CBDC development targeted at retail to a pilot phase. This is subsequential to the BOT wholesale CBDC initiative and proof-of-concept retail CBDC testing with private entities.
This plan included a potential test-running of the application of Retail CBDC within a private sector on a minimal level. As indicated, the process is divided into two tracks, namely foundation and innovation tracks. With the techniques, the BOT will determine the best way to draft policies regarding executing its CBDC initiative.
The BOT will test the CBDC in commercial activities like paying for goods and services. However, the testing will be restricted to places with not more than 10,000 retail users. This implies that the BOT will test the effectiveness of the CBDC as a means of exchange.
Further, about three firms will partake in the process: Bank of Ayudhya, Siam Commercial Bank, and 2C2P. According to the Central Bank of Thailand, the testing will likely commence before the end of the year.
Meanwhile, the innovation track will concentrate on developing other ways to implement the CBDC. This is a shift from utilizing the CBDC as a means of exchange. For this session, the private and public sectors will submit their use cases for the retail CBDC.
Participants will present use cases during a CBDC hackathon staged from August 5 – September 15. The BOT announced that qualified guests would get mentorship from renowned financial institutions.
Currently, the Central bank of Thailand has no plans to issue the Retail CBDC. The BOT divulged that issuance needs a stern consideration of risk and benefits for the finance sector in the country.
The latest development pushed Thailand to the Zenith among countries in the globe working on a CBDC. Notably, the BOT has taken a transparent approach to designing the regulatory framework of the CBDC. Involving the private and public sectors in the initiative will spark a sense of relief and optimism in both sectors.
The Asian country is a dominant figure in the crypto space. In 2021, the crypto trading volume in the country surged by about 600% due to the effect of worldwide crypto adoption. Recall that regulators in the country had approved four virtual assets service providers on Thursday. This development manifested despite the crisis that has hit the crypto space worldwide.
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