Category Archives: Bank of Thailand

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Thai, HK Central Banks Sign Fintech Deal for CBDC

Thai, HK Central Banks Sign Fintech Deal for CBDC

The central banks of Thailand and Hong Kong have signed an agreement for cooperation in the field of financial technology (fintech), including on a joint research project to develop a central bank digital currency (CBDC).

In the article by Regulation Asia, the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) are to collaborate on the referral of innovative businesses information and experience sharing, and joint innovation projects.

HKMA’s Project LionRock was done in collaboration with the three Hong Kong banks issuing bank notes; the Hong Kong Interbank Clearing Limited; and the R3 consortium, an enterprise-focused startup, to develop a better understanding of the feasibility, implications, benefits and challenges of implementing a CBDC on a distributed ledger technology platform.

For Thailand, the central bank had started on Project Inthanon along with R3 and eight other banks to develop and test a proof-of-concept for CBDC use in domestic wholesale funds transfer.

Referring to its Project LionRock and BoT’s Project Inthanon, HKMA stated:

“One potential collaboration under consideration by the two authorities is a joint research project on a CBDC, to which the two authorities may apply the knowledge and experience they gained from their respective CBDC research studies.”

BoT’s governor Veerathai Santiprabhob said:

“I believe there is huge potential to enhance quality of financial services by leveraging on technological advancement, and it is our responsibilities as regulators to create an ecosystem that is conducive to innovations.”

 

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Bank of Thailand Moves Forward with CBDC as Prototype Unveils

Bank of Thailand Moves Forward with CBDC as Prototype Unveils

The Bank of Thailand (BoT) is progressing with its digital currency project according to a recent update about a prototype.

The announcement was made in a press release by leading global information technology, and blockchain consulting firm Wipro who’s helping BoT in partnership with R3 to build the required blockchain framework for an interbank settlement among 9 banks – BoT inclusive, using a Central Bank Digital Currency (CBDC).

According to the document, the prototype was developed as part of the first phase of Project Inthanon, the blockchain-based CBDC initiative which was launched in August last year. The project is headed by BoT with 8 other banks as participating banks. The project was designed as an attempt into an economic inclusion as emerging financial technologies were taking center stage.

Wipro’s vice president Krishnakumar N Menon said: “The DL T-powered solution prototype has demonstrated the merits of blockchain technology adoption for making interbank payments more efficient.”

Blockchain technology continues to fascinate financial institutions across the globe, and banks are racing for inclusion. CEO of R3 David E Rutter stated in the document:

“Blockchain development is in a truly exciting phase given how more and more financial institutions are recognizing its potential to enable national digital currencies or CBDCs.”

While the subject of CBDC has reportedly been identified as having practicality in the banking sector, sentiments, however, are not particularly favorable for some countries. While some countries have outright disapproval fearing they may impact the economics of the state, others who have an interest have clearly stated they are not in a hurry to issue CBDC.

 

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Increasing ICO Interest in Thailand as 50 Apply for Licenses

In Thailand, initial coin offerings (ICOs) may soon be finding their legal footing after approximately 50 ICO projects displayed interest in applying for licenses to operate.

Application progress

According to local media outlet The Bangkok Post, the Thai Securities and Exchange Commission (SEC) has seen a growing interest in those wishing to raise funds through the crowdfunding method. Although, according to the SEC secretary-general Rapee Sucharitakul, it remains yet to be seen as to how many of those will be given the operating license.

Furthermore, there are roughly twenty other companies who have made applications for the licenses to operate as cryptocurrency exchanges.

He said, “Licence approvals are being processed,” adding, “Many companies interested in opening digital asset exchanges have said digital assets and cryptocurrency trading in the Thai market are quite active.”

ICO portal

Before the SEC licenses these projects, “ICO portals” will be the first to be selected. The portals are essentially online ICO marketplaces, offering platforms for ICO issuers to operate their sales. According to Sucharitakul, three out of five companies who are seeking to operate as ICO portals have filed their applications already.

In early May, proposals for cryptocurrency tax and regulations were slowly coming to fruition. This came at a time when many international governments and financial regulators were also beginning to formalize appropriate crypto-laws and legislation.

Chief executive Thuntee Sukchotrat of digital asset exchange JIBEX said, “I believe that investors will invest in digital assets instead of stocks in the future. The performance of ICOs will rise in line with ICO project performance. The investment ratio of ICOs to stocks will be on par within two years.”

Recent months

In late May, the Thai SEC established that it would monitor ICO operations and cryptocurrency related businesses. Furthermore, a regulated SEC ICO Portal was further discussed, which would allow for domestic ICOs to be issued legally.

In June, the SEC made further inroads upon the announcement of its cryptocurrency laws, though there are only seven legal cryptocurrencies, which are Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Stellar, and Ripple.

Shortly after, the SEC took five out of 50 ICO projects and announced they would be running them as pilots. Later on in August, Thailand reaffirmed its crypto-positive stance after the Bank of Thailand made it legal for local banks to issue digital tokens, provide crypto brokerage services, operate crypto-related businesses and invest in cryptocurrencies via subsidiaries.

 

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Bank of Thailand Seeks Efficiency Through Blockchain Solutions

Veerathai Santiprabhob, the Governor of the Bank of Thailand, has confirmed that the government-supported central bank will be further exploring the utilization of blockchain technology to provide a more efficient inter-bank payment system.

The bank will be undertaking a project to investigate the practicality of using blockchain technology to support a wholesale digital currency while also ensuring that inter-mediation activity is reduced and transactions within the system are highly secure.

In his speech at an international investment forum in Singapore, Santiprabhob noted the increasing acceptance of blockchain technology in the financial environment of Asia. He stated that Bank of Thailand and other national banks will co-develop a new way of conducting inter-bank settlement using wholesale central bank digital currency (CBDC).

Already, CBDCs are being used in a number of countries and many nations across the world are considering the feasibility of their introduction. In his speech, Santiprabhob advised that, like other central banks, the goal was not to immediately bring CBDC into use, but rather to explore its potential and implications.

He also confirmed that Thailand had commenced the Inthanon project which would be focused on increasing the efficiency of a number of key financial transactions and activities, such as the settlements, as well as Letters of Guarantee. This would include improving validation processes while reducing processing time and costs.

Thailand’s central bank has been going through a process of adaptation, including the introduction of legislative changes with a new Payment System Act, to prepare itself for ongoing developments in technology and increased digitization of financial processes. It is anticipated that through the adoption of innovative blockchain based processes there will be substantial reductions in fees and charges for business operators when compared to the traditional financial environment.

The governor also remarked, “These efforts should pave the way for faster and cheaper transactions and validation due to less inter-mediation needed compared to the current systems.”

Efficiency enhancements had already been identified as part of a trial associated with the issuing of bonds by the Central Bank. Santiprabhob noted that the project had been able to “speed up saving bond allocation to retail investors from 15 days to 2 days”.

The formal support for the Inthanon project clearly demonstrates a recognition by the Bank of Thailand of the role that blockchain technology will be playing in the official financial environment.

 

Image Source: Flickr – Kat

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