The Bank of Thailand has set an agenda for the central bank’s digital currency, with initial testing protocols set to begin in the second quarter of 2022.
The Bank of Thailand made the remarks in a press release on Friday, asking the public to comment on the proposed CBDC roadmap.
As part of the plans, the central bank published a preliminary report describing the central bank’s digital currency thesis. The Bank of Thailand explained the motivation behind the creation of the central bank’s digital currency, arguing that the success of private currency groups poses a risk to “monetary sovereignty and financial stability”.
In fact, in March, the main bank in Thailand deemed the digital Thai baht (THT) – a stack currency issued by Terra – to be illegal. At the time, the central bank referred to the country’s law prohibiting organizations other than the central bank from issuing currency in Thailand.
According to the Bank of Thailand report, the central bank will initiate its development efforts for the central bank’s digital currency with the participation of stakeholders followed by a cost-benefit analysis to identify the opportunities, risks and challenges associated with a high-quality digital currency.
For BoT, the ‘shift to quality’, that is, consumers who prefer central bank digital currency to currency as the market develops, remains an important risk factor. Therefore, the central bank proposes to add withdrawal limits among other frictional transaction protocols to reduce the possibility of massive withdrawals from banks when periods of market uncertainty arise.
As part of its initial reservation, BoT revealed that it left the door open for CBDC, hence why it launched its digital protocols for lackluster testing.
During a briefing on Friday, Wachira Arromdi, Assistant Director of Financial Markets Group at BoT, said the central bank sees CBDC as a way to increase access to financial services in the country.
According to Uromdi, the Digital Baht project could be implemented within the next three to five years. Members should submit their comments on BoT’s CBDC plans by June.
As Cointelegraph previously reported, BoT is also part of the CBDC consortium, which includes Hong Kong, China and the United Arab Emirates. In fact, the digital currencies of regional central banks have become a noticeable trend in the superior ecosystem of digital currency as participants strive for cross-border interoperability.
The Eastern Caribbean Central Bank recently launched a regional central bank digital currency for four of the eight countries in the Eastern Caribbean Monetary Union.