Thailand banks team up for digital revolution: Collaboration to launch retail CBDC

The Bank of Thailand is collaborating with three payment service providers, Bank of Ayudhya (Krungsri), Siam Commercial Bank (SCB), and 2C2P (Thailand) Co, to develop and launch its retail central bank digital currency (CBDC). The new financial infrastructure aims to enhance the convenience and efficiency of financial transactions while reducing costs.

The testing of the retail CBDC is scheduled to take place in a regulatory sandbox from June to August this year, according to Sam Tanskul, managing director of Krungsri Innovate, a corporate venture capital subsidiary under Krungsri.

Krungsri is among the first financial institutions to initiate a pilot test for the retail CBDC, called CBDC Krungsri. The bank has invited its staff and approximately 100 merchants near Krungsri’s headquarters to participate in testing the digital currency. The bank aims to increase the number of participants and has set a target of 2,000 staff joining the pilot project.

Tanskul explained that staff members participating in CBDC Krungsri need to install a mobile banking app and add money to it as an e-wallet, then transfer the money into a form of digital money called “digital baht.” One CBDC is worth one baht.

Users can then pay for goods and services at participating stores by scanning a QR code. He said…

“The bank educated both merchants and staff about retail CBDC before launching the pilot project, and the testing has run smoothly.

“Krungsri has not set a limit in terms of transaction value, focusing instead on stabilising the payment system, particularly during peak periods.

“If the payment service is functional and stable, it could help ease the intensity of transactions made under the PromptPay service during peak periods.

“Apart from payments for goods and services, another use case for retail CBDC is state welfare payments, similar to the Pao Tang app or a specific loan programme.

“The bank needs to determine a strategy to differentiate retail CBDC from PromptPay service. The adoption of digital baht should benefit the country’s digital economy in the long term.

“Given its digital form, the central bank does not need to produce physical coins and notes, meaning if the adoption of digital baht increases, it would reduce the costs associated with supplying money to the economy.

“SCB also launched its CBDC SCB Wallet pilot project, which is open to participation among bank staff and merchants near its head office.”

The central bank expects the testing of retail CBDC to involve around 10,000 participants in total, Bangkok Post reported.