The Bank of Thailand is going to issue central bank digital currency. Is it really a good thing for the national team to enter the market?

According to Bitcoin on August 24, the Bank of Thailand is working with the country’s largest banks to develop a central bank digital currency (CBDC) - Inthanon.

The Bank of Thailand said that the Inthanon plan covers the design, development and testing of digital currency for fund transfers between financial institutions .

In the first phase, the relevant institutions will jointly develop and design based on the R3 Corda platform, and Inthanon will first complete the development of the inter-bank fund transfer function. It is reported that the project is similar to the projects currently being developed by other central banks such as the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.

In the next phase, participating commercial banks and R3 plan to expand the use of digital currencies to include third-party fund transfers and cross-border payments.

Since the issuance of digital currencies in Thailand came into effect on July 16, the policy environment in Thailand has changed a lot . Currently, the Securities and Exchange Commission (SEC), the main cryptocurrency regulator in Thailand, has legalized the trading of seven cryptocurrencies, and seven crypto companies have been approved to operate legally in Thailand. Currently, Thailand is also reviewing the cryptocurrency operation applications of some companies in Thailand. In addition, the country's central bank has also given the green light to the crypto business subsidiaries of some commercial banks.

Previously, Odaily Planet Daily has also been paying attention to the attitudes of various countries on the issuance of CBDC. The Bank of Spain also released a research report on the issuance of CBDC.

The report believes that there are four main reasons why some central banks want to issue CBDC: reducing the demand for cash use; improving the operation of the payment system; improving the transmission of monetary policy; and combating illegal activities . But is CBDC really a good thing with no disadvantages?

Currently, there are only a handful of countries that have issued CBDCs. The Bank of Spain’s CBDC issuance report once summarized the risks that may arise from issuing CBDCs:

First, it is difficult to characterize CBDC. If non-anonymous is chosen, the central bank needs to shoulder the responsibility of supervision, which increases another regulatory cost in addition to the supervision of legal currency. If it is set to anonymous form, CBDC may be used by criminals, which also increases the regulatory risk. Secondly, the introduction of new currencies may cause certain risks and instability to the originally stable financial situation, which may not be worth the loss.

At present, the Bank of Thailand limits the users of its CBDC to banking institutions, which is a "wholesale" CBDC only for financial institutions. The launch of the Inthanon plan is only a small test of CBDC, and the specific results remain to be seen.

This article refers to multiple sources of information: https://news.bitcoin.com/thailand-developing-central-bank-digital-currency/