The Bank of Thailand (BoT) has announced a landmark project which will see the launch of a Central Bank Digital Currency (CBDC) using R3’s Corda platform.
Project Inthanon Phase 1
As written in a 21 August press release from the BoT, Project Inthanon is in Phase 1. Iin this period, the BoT and participating banks will collaborate to design, develop and test a proof-of-concept (PoC) for domestic wholesale fund transfers using a “wholesale CBDC”.
A wholesale CBDC differs from a “retail CBDC” in the sense that wholesale limits usage to financial institutions and markets, as opposed to retail, which is for general public use.
It will use R3’s Corda, an open source distributed ledger technology (DLT) platform that is enterprise-focused. It positions itself as a tool for financial services, according to the official website, enabling “institutions to transact directly using smart contracts”.
The BoT describes this project as a “collaborative milestone”; there are eight banks confirmed as participants which include HSBC, Bangkok Bank Public Company Limited and Thanachart Bank Public Company Limited.
Collaborators will be exploring the potential implications and benefits of DLT in a bid to “enhance efficiency of the Thai financial market infrastructure”; through this, they will create a PoC for a prototype.
The press release writes, “Key payment functionalities such as liquidity saving mechanism and risk management will also be developed and tested during this phase. Project Inthanon Phase 1 is expected to be completed by the first quarter of 2019 after which the BOT will publish a project summary accordingly.”
Thailand’s intention to explore a CBDC were first revealed in July when the Governor of the BoT gave a speech in Singapore. He described the growing acceptance of blockchain technologies within financial institutions in Asia and that the BoT, as well as other national banks, will begin looking into the concept.
CBDCs around the world
BoT also makes note of other financial institutions around the world who are also exploring the concept of a CBDC, naming the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.
In July, a Senior Economist in the Funds Management and Banking Department for the Bank of Canada released a compelling and comprehensive research paper titled ‘Central Bank Digital Currency and Monetary Policy‘. In great detail, it explored CBDCs in the context of social welfare.
The study pointed out that having both cash and a CBDC within a country could result in lower welfare, estimating that economic welfare gains in Canada could increase marginally but increase nonetheless.
CBDCs aren’t a particularly new concept; other societies around the world such as Senegal in West Africa have experienced widespread benefits from the implementation of such a currency alongside the native fiat currency.
Larger nations such as the United Kingdom have also expressed interest, with the Bank of England openly contemplating the possibility of a CBDC.
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