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Thai Central Bank Developing Payments Systems Prototype Using CBDC

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Thai central bank has become the latest financial watchdog to join the Central Bank Digital Currency (CBDC) bandwagon. The Bank of Thailand (BoT) announced its project to build a decentralized payments system prototype for commercial use.

According to the announcement, the CBDC prototype will be hosted by the Inthanon Project, the blockchain infrastructure inaugurated by the Bank of Thailand. This will be achieved through a partnership with the country ‘s eight leading financial institutions.

The entire project involves carrying out a feasibility study and creating a procedure for linking Central Bank Digital Currency to the Business Payments System, as per the Thai Central Bank. The prototype project is set to start in July and will continue until the end of the year. The findings of the scheme will then be outlined by the Thai central bank to the public.

Thai Central Bank making a step forward in driving CBDC adoption

The Bank of Thailand sees the project as a significant step forward in expanding the CBDC ‘s realm and driving its adoption to a broader audience, starting with big corporations. The payment system will be linked to the procurement and financial management systems of Siam Cement Public Company and its stockists,

The Thai central bank anticipates that the CBDC prototype will facilitate coherent and more flexible transactions or a faster and more flexible settlement between suppliers. In addition , the Bank of Thai also noted that proof of concept for local wholesale revenue; was finalized in January alongside the cross-border transfer prototype; developed in partnership with the Hong Kong Monetary Authority (HKMA).

Development of CBDC’s worldwide

Different central financial authorities are keenly exploring the development of CBDC’s around the world. For instance, the Bank of Korea (BoK) recently established a legal advisory panel for the development of digital currencies.

Furthermore, the Bank of France has partnered with local private banks to run a pilot test for state-issued cryptocurrencies in Europe.

Blockchain Payments System Being Launched in Cambodia

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Southeast Asian nation, Cambodia is launching a blockchain payments system to enhance the use of the country’s fiat currency. The new blockchain network is set to improve the use of the country’s local fiat currency, scaling down the use of the United States dollar.

Moreover, the new blockchain payments system will enable real-time payments, and scaling down the nation’s cost of payment massively. Nevertheless, the new payments network will have several benefits, but bringing down the over-reliance in the U.S dollar is the key objective.

90% of local payments in Cambodia are in USD

According to the assistant governor of Cambodia’s central bank, Serey Chea during a recent event, the United States dollar accounts for more than 90 percent of local payments. In addition, he claims that the huge reliance on the dollar makes Cambodia one of the most dollar-dependent economies on the planet.

Nevertheless, the new blockchain payments system is Cambodia’s biggest chance of reducing the over-reliance on the dollar, which the central bank intends to use fully. Additionally, the assisted governor noted that the central bank intends to launch the DLT network later in the year, “hopefully very soon.” 

The new blockchain-based payments network aims to bring together banks, digital wallet platforms, facilitating transactions between users and their preferred platforms, and among themselves. 

All financial institutions to join the blockchain payments system

At the moment, the payments system has 12 of Cambodia’s top financial institutions. However, the assistant governor expressed a lot of confidence in all financial service providers joining the new blockchain payments system. 

Moving forward, the blockchain system will also expand to foreign soils, with money transfer services expanding to the neighbouring country of Malaysia. More than 300,000 Cambodia citizens work in Malaysia, and they transfer funds to their home country every month. Transferring the funds is very expensive, and the blockchain payments system is expected to bring this cost down massively.

Digital Technology Adoption Triggered by COVID-19

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Initially, before lockdowns were made worldwide due to the novel coronavirus pandemic, digital technology in banking was already gaining momentum. The adoption of digital technology has increased in the midst of the current lockdown.

Current trends lead more businesses to adopt emerging technologies, such as electronic payments, which would benefit fintech and other related firms during this pandemic. According to the President of the Singapore Fintech Association, Chia Hock Lai, the extended span of social distance would alter the customer’s and business preferences leading to digital technology; not only millennial and digital awareness, but inclusive of all age groups.

Digital Technology adoption among businesses and financial institutions to accelerate

Industry gurus and academics claim that start-ups, especially those with strong funding, would have to live long enough to enjoy the benefit, and this could turn out to be a challenge if investors expand more cautiously.

Indeed, DBS Bank, headquartered in Singapore, initially approximated to fully digitize one million clients by 2021. This figure was triggered by the safe distance norm and circuit breaker measures that lead individuals online in 2020. The bank is now just 100,000 clients below the target amount.

According to the DBS consumer banking group head:

 “We anticipate that Covid-19 could accelerate the digital adoption timeline by years.We can expect this momentum to be maintained. Past studies have shown that customers who pick up digital payments or banking services tend to keep up with them after overcoming the initial inertia, or when they have the impetus… to adopt digital services.”

Fintech startups to struggle to obtain consistent funding

Moreover, according to OCBC Bank’s Head of Digital and Innovations, Pranav Seth, financial transactions increased by a massive 40% in the first three months of this year, compared to the same period last year. In addition, he reported that digital transactions on the PayNow bank’s platform had increased three times, while ATM transactions had decreased by 20% between February and March.

In conclusion, Assistant Professor Wang Xin of Nanyang Business School claims that some financial technology start-ups may face financial challenges due to the current high unemployment rate and credit needs of heavily affected sectors such as airline, hospitality and entertainment.

Digital Technology Crucial in Fight Against Coronavirus Pandemic, Says G-20

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During a video conference held on April 30, members from the Group of Twenty (G-20) member nations, emphasized that digital technology and policies are playing a crucial role in retaliation to the widespread COVID-19.

At the Extraordinary G-20 Digital Economy Ministers Meeting, Mr. S. Iswaran, Minister of Communications, who also represented Singapore, stated that coronavirus had critically deranged economies, international trade, and global supply chains.

According to Iswaran, digital technology and policies are doing extra work to improve response to the coronavirus pandemic and recovery from the epidemic. The Communications Minister pointed out three areas where digital tech and policies can reap near-and long-term benefits: intensifying public health, equipping citizens with knowledge, and reinforcing the economy.

Digital technology and policies in health sector 

In addition, he added that the COVID-19 crisis has lad to the need for digital health solutions including telemedicine, and earmarked interventions such as automated temperature screening and the pursuing of contacts.

Moreover, digital technology has made it possible for administrations to engage with the citizens; to enhance widespread trust and togetherness in order to ease effective retaliation against COVID-19.

Furthermore, Iswaran stated that it is significant for business ventures to employ digital tech and policies to enhance the durability of their entities. Adoption of digital technologies such as digital payment methods and online selling would ramp up sales especially during this period clouded with pandemic uncertainties.

Moving forward, while speaking at Saudi Arabia’s invitation, Iswaran added that the coronavirus epidemic has highlighted the significance of making substantial investments in digital connectivity networks and cybersecurity. Adding to that, he claimed that 5G is the spine of the digital economy.

Ministers to revamp business durability by promoting digitization projects

During the virtual meeting, the ministers present concurred to focus on six areas of work. These areas of work include ensuring the security and affordability of communication systems; and network security while transmitting data; and inspiring research and adoption of digital health technologies.

The ministers also concurred in the bid to reinforce business pliability by promoting digitization and offering support. Saudi Arabia’s Minister for Communication and IT,  Abdullah Amer Al-Swaha chaired the virtual meeting.

Dharma Launches Social Payments Feature Enabling Dollar Transfers to Any Twitter Handle

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Several mainstream financial companies have taken new and innovative steps to improve the process of capital transfer within the ecosystem. Since the start of proper fiat transfers, users have been clamoring for a more streamlined process that can be beneficial for everyone.

On April 22, Dharma launched its native social payments system to make capital transfers easier across Twitter. Using the latest feature, users will be able to send the US dollar to any Twitter handle regardless of the receiver’s geographical location. 

Dharma claims that its new update is the easiest way to pay and save money on a global scale. The decision to implement social payments was made after Dharma saw massive potential in allowing users to send money to Twitter handles. One of the most important highlights of the feature is that the person on the receiving end does not need to hold a Dharma account.

Dharma has also provided a detailed breakdown of the processes to be followed while sending and receiving money. Dharma’s Twitter thread said:

“Introducing Social Payments- a Twitter-native financial ecosystem. Today, you can send USD to any Twitter handle, regardless of where that person lives — even if they don’t have a Dharma account. Now *every* Twitter handle accepts (and earns interest on!) payments.”

One of the biggest gainers from the Twitter payment system will be the micropayment and tipping industry. In addition, Dharma claimed that it would be much easier for people to send money across borders to charities without any hassle. Businesses can also use the opportunity to make payments quickly and efficiently.

To kickstart the process, users need to first deposit the required funds to their Dharma account and then finalize the receiver Twitter handle. Once the payment is made through the Dharma account, the sender is required to retweet @Dharma_Bot and tag the recipient account on Twitter.

The receiver on their end has to initiate the link sent by the Dharma Bot after which they will receive the transferred funds to their newly created account. Another added advantage of the transfer feature is that the receiver will begin earning interest as soon as the fund hits their account. Dharma is the first platform to offer payments in USD and USD backed stablecoins.

Other platforms such as Brave and Tippin already allow tip transfers on Twitter but only using the Brave token or Bitcoin. The Dharma application is currently available on both Google Play Store and the Apple Store. Dharma was also in the news recently for developing a new specification for network scaling. Developers said that the addition would scale up the Layer 2 process by 10x, a significant figure in any network.

China’s Digital Renminbi in the Face of an Epidemic

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The World Health Organization, on Wednesday, declared COVID-19 a global pandemic. Officially known as COVID-19, CNBC reported on March 11 that coronavirus has spread sufficiently worldwide to warrant classification as a pandemic. From Asia to the Middle East, Europe, and the United States, the virus has spread quickly to over 121,000 people.

Will Covid-19 Drive Inception of the Digital Yuan?

Former Chinese Central Bank president told press reporters that they are currently considering digital currency as a way to counter  the spread of Coronavirus. It came following a government ultimatum to clean cash in February, before giving it back to the public.

In fact, the government has quarantined old paper notes worth at least $85.9 billion. As a result, they also published the same amount of new money in the virus ‘ originating area-Hubei. The ultimatum required banks to issue sterilized notes only to the public. Therefore reducing the chances of spreading of coronavirus during transaction activities from person to person.

The former People’s Bank of China president Lihui Li told China Daily how a digital payment system would bring convenience during epidemics. Lihui Li currently serves as the blockchain head for National Internet Finance Association (NIFA). NIFA is a state-run fintech organization.

In addition, Lihui Li highlighted the adoption of digital stablecoins was partially dependent on retail demand. For instance, the retail market in China is presently dominated by WeChat and Alipay. Both of these are pretty excellent forms of digital payment and alternative payment means. 

In the aftermath of the coronavirus attack, both micro-and macroeconomics suffered. The effect has obviously impacted money supply, especially from high-risk sites. PBOC requires officials, for example, to seal all the money from hospitals and volatile markets and issue it to the central bank. And the central bank reissues the money back to circulation.

China’s PBOC deputy governor highlighted the nation’s focus on national health and safety. The official said: 

“After the outbreak, we paid great attention to the safety and health of the public’s use of cash,”

Some of the safety measures that the Central Bank has implemented include suspending cash transfers between provinces. As well as minimizing the movement of business and government personnel and thereby reduce the risk of transmission. Moreover, the Central bank also issued at least $4 billion worth of banknotes to Wuhan. Which is a percentage of the 600 billion new yuan notes that the bank allocated to disinfect the cash in circulation? 

Some have felt that disinfecting the monetary supply will have minimal impact in containing the disease. Muhammad Munir, a professor at England’s Lancaster University said it was difficult to remove traces of the virus from objects, including banknotes. Munir said: 

“While COVID-19 can spread through contaminated objects, the duration of coronavirus survival on currency notes is not determined”

He also added that since most of China’s daily purchases are made online, the impact of cash restriction will have a slight effect on the spread of coronavirus. 

The virologist said the only way to curb disease transmission has been through good hygiene.  Advice that many medical professionals have been communicating with the public.

 Washing hands using alcohol sanitizers could easily restrict hand to hand transmission of the infection. Since the point of transmission among most people exchanging cash is through the hands. Therefore, maintaining hand hygiene should be top of the list while curbing the spread of coronavirus.

On the other hand, a couple of people have felt the need for a central bank-issued stablecoin. This, they say, would be desirable and convenient in times of national disasters.