The Bank of Thailand (BoT) has published the results of a new study into how to manage the implications of issuing a retail fundamental bank digital currency (CDBC) for the country'due south fiscal sector.

As singled-out from a wholesale CBDC, which is limited to utilise by financial institutions and intermediaries, a retail CBDC is widely available for use by the general public. The Bank of Thailand, like many other central banks worldwide, has been engaged in CBDC research and development and now plans to brainstorm testing a CBDC next year. Unlike the BoT, non all these central banks have committed to trialing specifically retail CBDCs.

From its latest study, the BoT has disclosed three key conclusions it has drawn for ensuring that retail CBDC issuance does not present risks for financial stability. Having previously identified a "flight to quality," i.east., consumers preferring CBDCs to existing fiat currency in certain situations — as a major run a risk factor — the BoT'southward study notes that further challenges may include an adverse effect on monetary policy manual or on existing financial institutions. To prevent this, the written report suggests that the following three points are crucial:

"(1) the CBDC shall be cash-like and not-interest-bearing, (2) intermediaries such as financial institutions shall be the distributors of CBDC to the full general public, and (iii) weather or limits for converting CBDC shall be established."

Such measures, the BoT suggests, will aid to ensure that a retail CBDC does not compete with bank deposits and to "preserve the office of intermediaries in collecting deposits and providing credit too equally managing liquidity in the overall financial organization." These measures likewise provide a safeguard against runs on fiscal institutions, in the BoT's view.

Related: Thailand'south fundamental bank warns confronting 'illegal' THT stablecoin

Notably, the BoT predicts that public demand for a retail CBDC will grow over time and could atomic number 82 to such a currency condign an alternative form of payment in the hereafter, in lieu of cash and existing forms of e-money.

Alongside these takeaways, the BoT has disclosed further details of its planned airplane pilot for a retail CBDC in real-world situations. The pilot volition be separate into two tracks. The first, the "Foundation Runway," will brainstorm in Q2 2022 and will involve using the currency to behave cash-like activities at a express calibration, east.g. as a payment or receipt for goods and services, as well as for conversion.

The 2nd, more ambitious "Innovation Rails" will explore ways in which a retail CBDC can be used for more novel utilise cases, drawing on input from private sector actors and engineering science developers. The roadmap for this second track has non nevertheless been finalized and the BoT indicates information technology is still developing the pilot's format and assessing which actors will be eligible to participate in its bear.

Every bit previously reported, the BoT has joined forces with several major banks across Asia to piece of work on a projection for a prototype cantankerous-edge CBDC or Multiple Cardinal Depository financial institution Digital Currency Span (m-CBDC) that uses distributed ledger technology. Other participant banks include the Hong Kong Budgetary Authority, the Primal Depository financial institution of the United Arab Emirates and the Digital Currency Institute at the People'south Bank of Prc.