The (Central) Bank of Thailand issued a press release yesterday stating that they are launching a project to increase the technological readiness of its financial sector in adopting new technologies.
Codenamed ‘Inthanon,’ the project is lead by the Bank of Thailand, Thailand’ central bank, and will see the participation of most of Thailand’s larger banks, as well as the Hongkong and Shanghai Banking Corporation. The primary purpose of the project is to explore the benefits of Distributed Ledger Technology for financial market infrastructure. The banks will cooperate with the Bank of Thailand and tech industry experts to create a prototype system for the transfer of large amounts of money between Thai banks. The prototype will be built using Corda, a distributed ledger platform by the company R3.
The Scope of the Project
The first phase of the collaboration will see the creation of a distributed ledger for transfer of money between carefully vetted Thai banks and the government-controlled central bank. A particular currency will be created for the accounting, called Central Bank Digital Currency, or CBDC. The currency will be pinned to the national currency, the Baht.
The first phase of the project is expected to be completed during quarter 1 of 2019, with key parameters to be explored the security of the system and its effect on liquidity for the banks.
Around the World
Thailand is faster than most countries to explore the use of distributed ledgers for internal money transfers, but they are not quite the first. R3, the tech company hired to oversee the experiment has previously worked on comparable projects for other central banks and governments around the world, including the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.
Also, the Central Bank of Sweden has been in talks with the IOTA Foundation about the possibility of creating a national currency on the Tangle (what IOTA uses instead of a blockchain) called the E-krona. Still, Thailand is one among not very many countries currently considering using this new technology to power its financial system.
If all goes as planned, the country will certainly benefit down the line from potential technological advantages and the experience the leaders of its banking sector will have over the competition.
In addition to project Inthanon, Bank of Thailand is working on a proof of concept scripless government savings bond, although little information is available on that for now.