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Central bank digital currency: Applications for domestic and cross-border transactions in Thailand
Journal of Digital Banking,
6
(4),
319-330
(2022)
Abstract
With the belief that Distributed Ledger Technology (DLT) holds the promise of bringing greater efficiency, inclusion and innovation to the financial system, the Bank of Thailand (BOT) began research and development of a proof-of-concept central bank digital currency (CBDC) utilising DLT for wholesale domestic and cross-border funds transfers, beginning with Project Inthanon in 2018. A proof-of-concept corporate CBDC was also subsequently developed, and the exploration of a retail CBDC for the general public is currently under way. In this paper, we discuss the important findings and considerations of each CBDC project. We found that DLT can increase efficiency in both domestic payment systems as well as cross-border transactions by enabling direct transfers between parties and providing enhanced programmability through the use of smart contracts. Several technical shortcomings still exist and will need to be reevaluated. Furthermore, studies on governance structure, regulatory issues and implications of CBDC for monetary policy, financial stability and the future financial landscape must be carried out before proceeding to develop production-ready systems and networks.
Keywords: central bank digital currency; Distributed Ledger Technology; wholesale CBDC; retail CBDC; cross-border payments
The full article is available to subscribers to the journal.
Author's Biography
Vachira Arromdee currently serves as Deputy Governor for Corporate Development at the Bank of Thailand, where she oversees holistic organisational management, including human resources, technology, risk management, legal, banknote management and corporate services. She also serves as Chairman of the Banknote Management Committee, Member of the Monetary Policy Committee and the Payment Systems Committee. Vachira is a CFA Charterholder. She received her Bachelor of Accountancy degree from Chulalongkorn University (Thailand) and her Master of Business Administration degree from the University of Bridgeport (USA). She also holds a Master of Arts degree and a PhD in Economics from the University of Georgia (USA).
Tunyathon Koonprasert is a Senior Specialist on the Digital Currency Team at the Bank of Thailand, in which role she is responsible for central bank digital currency (CBDC) projects and other digital currency initiatives. She also has experience in foreign exchange markets and regulatory compliance. Tunyathon holds a Bachelor of Business Administration degree from Ritsumeikan Asia Pacific University (Japan), a Master of Science in Finance degree from Chulalongkorn University (Thailand), and a Master in Public Administration degree from Harvard University (USA).
