Central Bank Digital Currencies, or as popularly known as CBDC, is the talk among central banks across the world. Riding the wave of a massive digital revolution, CBDCs offer risk-free, that is backed by the country’s central bank money denominated in cash. The latest country to jump the bandwagon is Thailand.
The Southeast Asian country published guidance outlining its views on central bank digital currencies [CBDC]. The Bank of Thailand [BOT] categorized stablecoins into two groups – one that is backed by the country’s currency, the baht, and other forms of stablecoins.
The guidance revealed that BOT is currently in the process of developing a retail central bank digital currency [CBDC] to accommodate the demands of the general public, enhance service efficiency in the business sector, as well as increase access to financial services. It further stated,
“The BOT will continue to closely monitor the developments of new technologies, taking into account the benefits and related risks in the effort to adopt policies supportive of promoting ongoing economic development while maintaining financial system stability.”
According to BOT, Baht-backed stablecoins are cryptocurrencies that are essentially designed to reduce volatility by pegging its value to the Baht. These are used as a means of payment. The guidelines mentioned that such stablecoins may be designated as electronic money [e-Money] under Thailand’s Payment Systems Act 2017.
While acknowledging that the bank oversees risks associated with e-Money, like in cases of settlement, money laundering cybersecurity, and consumer protection risks, BOT stated that the service providers of Baht-backed stablecoins are required to consult with it for consideration before starting any operations.
The Other Kind:
With regards to the ‘other forms of stablecoins” that include foreign currency-backed, asset-backed, and algorithmic stablecoins., BOT maintained that they are not illegal. The bank also welcomed dialogues and said that it is “open to receive comments and feedback before considering regulatory guidelines as appropriate”.
The latest development comes shortly after Thailand reportedly alerted its citizens against privately-issued stablecoin.
Previously in June 2020, Bank of Thailand had announced a partnership with The Hong Kong Monetary Authority, for the development of a prototype for a cross-border blockchain payment system known as “Project Inthanon-LionRock“.