Thailand's Central Bank Will Begin Exploring Digital Currencies In 2022
By Ollie H - Crypto Consultant
The Bank of Thailand (BoT) has laid out plans for a retail Central Bank Digital Currency (CBDC), with preliminary testing protocols expected to begin in the second quarter of 2022. Thailand's central bank has sought public input on its initial proposal to introduce a sovereign digital currency over the next five years. Thailand's central bank revealed this in a press release published on Friday, seeking public feedback on the proposed CBDC roadmap.
Central bank digital currencies model themselves on stablecoins. Investing in cryptocurrency is volatile due to price fluctuation and stablecoins try to address this by pegging their value to an external stable asset, usually fiat. For example, you can buy Tether (USDT) for the equivalent price of $1.
The central bank released a preliminary report outlining its CBDC thesis as part of its plans. The Bank of Thailand explained its reason for forming a CBDC by arguing that the performance of private stablecoins undermines “monetary sovereignty and financial stability.”
After all, Thailand's central bank declared Thai Baht Digital (THT) — a stablecoin issued by Terra — illegal in March. At the time, the central bank cited a provision in Thai law that prohibits anybody other than the central bank from issuing currency in Thailand.
According to the study, the Bank of Thailand will begin its CBDC development activities by interacting with stakeholders, accompanied by a cost-benefit analysis to determine the possibilities, threats, and difficulties associated with a sovereign digital currency. The BoT announced as part of its preliminary conclusion that it was keeping the door wide open for a CBDC, which is why it is kicking off its digital baht testing protocols.
The digital baht project, according to Arromdee, could be introduced within the next three to five years. Contributors have until June to provide their feedback on the BoT's proposals for a CBDC. Thailand is also a member of a CBDC collaboration that brings together Hong Kong, China, and the United Arab Emirates. Exploring protocols to enable cross-border compatibility is becoming increasingly popular, with regional CBDCs emerging as a visible trend in the evolving sovereign digital asset ecosystem.