R3 Helps Bank of Thailand Test Own Digital Currency

Thailand’s central bank will pilot a wholesale central bank digital currency (CBDC) based on a blockchain developed by R3.

The Bank of Thailand (BOT) disclosed on Monday it expects to complete a proof of concept (PoC) of a wholesale CBDC based on R3’s blockchain technology by the end of Q1 2019.

In order to examine what benefits distributed ledger technology (DLT) can potentially bring to the financial market in the country, the BOT has decided to join hands with eight banking institutions: Bangkok Bank, Krung Thai Bank, Bank of Ayudhy, Kasikornbank, Siam Commercial Bank, Thanachart Bank, Standard Chartered Bank (Thai) and the Hongkong and Shanghai Banking Corporation.

A major goal for the partnership, dubbed Project Inthanon, will be to create a CBDC that the BOT will use for domestic transfers of wholesale funds. The currency will be built on the Corda protocol of US blockchain start-up R3 and will seek to improve operational efficiency within the Thai banking sector.

Additionally, Project Inthanon will trial payment functionalities, like liquidity-saving mechanisms and risk management.

Upon completion of this first phase of the project by the first quarter of next year, the partners will work to incorporate also other functions of the CBDC that will allow cross-border and third-party transfer of funds.

The recent announcement by the BOT came less than two months after governor Veerathai Santiprabhob revealed the central bank’s intentions to create its own virtual currency in an effort to cut costs and facilitate transactions between Thai banks.

“Like other central banks, our goal is not to immediately bring CBDC into use, but rather to explore its potential and implications for back office operations,” explained Santiprabhob at an economic forum in Singapore held on June 5.

In his words, Thailand is also working on other blockchain-powered initiatives that include, for instance, scriptless bond issuance.