The central Bank of Thailand (BoT) revealed on Wednesday plans to introduce a state-issued cryptocurrency on R3’s Corda blockchain. The move signifies the first such development in the South East Asian region.
Thailand’s Hopes for Economic Boost
As per details of a press release, BoT referred to the protocol as a “wholesale” Central Bank Digital Currency (CBDC), meaning its use is limited to financial institutions and related markets. The clarification puts to rest rumors of a state-controlled cryptocurrency for the citizens, which would be referred to as a “retail” CBDC.
The experiment will see BoT partner with eight major international and Thai and banks including Bangkong Public Bank, Krung Thai, Siam Commercial Bank, HSBC and Standard Chartered, among others.
BoT describes the development as a “collaborative milestone,” presumably highlighting the number of banks agreeing to partner on the project despite any inhibitions in their personal capacity.
All eight partners will design a proof-of-work protocol that will run the architecturally decentralized blockchain system, with BoT expecting the first prototype available in early 2019.
The project is dubbed “Inthanon,” which is also the name of Thailand’s highest peak; however, it is unconfirmed if BoT took inspiration from the 2,565 meter-tall mountain.
As described, Inthanon will aim to enhance the efficiency of Thailand’s financial ecosystem in the backdrop of a weakening economy, while substantially contributing toward a responsible evolution of the Thai equity market.
In addition to Inthanon, BoT is developing a technology (DLT) system to issue “scripless” government savings bonds to “improve operational efficiency.”
For R3’s Corda enterprise blockchain, the move is a saving grace to its falling fortunes, which have appeared after several founding partners left the consortium in 2018 and disgruntled employees called out the company’s mispractices, including luxury travel allowances for executives and minimal work development.
However, the company continues to maintain an ambitious stance for its natively-developed DLT platform. For the uninitiated, Corda uses a permission system to define data access for verified participants. The protocol is developed with the financial clientele in mind, as opposed to a cryptocurrency framework.
CBDC Creating Divide
The concept of a CBDC continues to draw both flak and appreciation from authorities around the world.
For the uninitiated, a CBDC denotes a cryptocurrency whose legality, protocol and functionality are controlled by a central state authority. While the concept has been in place since the prominence of Bitcoin, few countries have made developments in this regard, with only Sweden’s e-Krona and a yet unnamed Carribean CBDC being other noteworthy mentions.
In April 2018, R3’s director Anthony Lewis stated the year would see heightened efforts by regulatory authorities and banks to develop a CBDC, making his prediction based on the rise of institutions realizing the potential of blockchain and state-issued crypto-tokens.
Meanwhile, retail CBDC’s remain a gray area for authorities. In March 2018, the Bank of International Settlements (BIS) published a 34-page report on state-issued digital currencies, concluding that “a general purpose [retail] CBDC could give rise to higher instability of commercial bank deposit funding.”
Cover Photo by Andreas Brücker on Unsplash