The Bank of Thailand (BoT)has said that it has plans to initiate a CBDC which will be primarily aimed at internal bank transactions.
The BoT is partnering with eight financial institutions on the CBDC project – including Bangkok Bank Public, Krung Thai, Siam Commercial Bank, Standard Chartered Bank and HSBC. The bank has suggested that the CBDC could cater for domestic wholesale funds transfers, third-party funds transfers, and cross-border transactions, along with some further applications. The CBDC project is similar to those carried out by other central banks, including the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.
Banks using the r3 Corda blockchain have the advantage of completing asset settlements with multiple participants, a reason why Ripple adopted their own system. These tokens cannot be mined as the bank will have complete autonomy as creator and distributor due to the centralized nature of using the r3 blockchain.
The BoT is currently working on the digital currency which will be built on an r3Corda blockchain, an open source blockchain which is very similar to that designed and used by Ripple. Complications could arise for the Thai central bank by choosing this particular system as legal steps have been taken by Ripple against the r3 company over possible patent issues regarding “borrowing” Ripple Labs’ expertise.
Clearly, the centralized nature of such tokens has attracted some critics given the nature of cryptocurrency and the attraction of it being tamperproof due to its decentralized status, an issue which has landed Ripple in deep water over the years. Not only can such tokens be labeled as securities rather than assets, but as Ripple has discovered users have shown some concern about the system being open to manipulation due to the tokens being issued by one source.
Should the project be launched and CBDC become a reality the BoT have further plans to extend it for what it calls “broader functions”. The first phase of “Project Inthanon” aimed to “enhance the efficiency of the Thai financial market infrastructure” is expected to be completed by the first quarter of 2019.
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