Los Angeles (CoinChapter) – The Bank of Thailand revealed plans to begin tests on a retail central bank digital currency (CBDC) in the second quarter of 2022.
The news comes after the bank issued regulations on asset-backed stablecoins. Warning against the illegal use of a baht-denominated stablecoin that was created outside the country.
In a detailed report, the Bank of Thailand explained that the success of private stablecoins will go a long way toward financial stability.
The central bank will begin the process by engaging with stakeholders before moving on to cost-benefit analysis. After that, it will assess the risks and challenges associated with a sovereign digital currency.
A major risk factor for the Bank of Thailand is consumers preferring CBDCs to fiat currency during market upheavals. To combat this, the central bank is proposing the addition of withdrawal limits. Among other transaction friction protocols to reduce the possibility of bank runs.
According to Vachira Arromdee, the assistant governor of the financial markets operations group at the Bank of Thailand. The central bank views CBDCs as a way to provide greater access to financial services in the country.
Arromee was optimistic with the potential timeline of the digital baht project. Saying it could be completed in the next three-to-five years. Members will have until June to offer input on the BoT’s plans for a CBDC.
It’s worth noting that the Bank of Thailand is part of a CBDC alliance that involves China, Hong Kong and the United Arab Emirates. They are among the other countries that have plans to develop their own CBDC.
Eastern Caribbean Central Bank joins Bank of Thailand in developing CBDC plan
In addition to the Bank of Thailand, the Eastern Caribbean Central Bank has plans to launch their own CBDC. The bank has already begun trials in four of the eight nations in the Eastern Caribbean Currency Union.