Central Bank of Thailand suggests ways to reduce risks of digital baht – Bits Media

Central Bank of Thailand analysts (BoT) suggested three ways, how to avoid the negative consequences of the release of retail state digital currency for the financial sector of the country.

Along with many other central banks, Bank of Thailand too Explits the possibility of releasing digital currency and plans to start its testing next year.

In a recent study, Bot paid special attention to retail digital currency, which will be available to a wide audience. Earlier, analysts of the bank Thailand said, that in the presence of certain circumstances, people can completely move from the use of fiat currency to state stablecoin. This can be poorly reflected in the country's credit and money policy and “gear” the activities of financial organizations.

Bot has highlighted several factors, which will help to avoid risks for the financial stability of the country in case of launching a retail digital bat. First of all, digital Thai baht should function similarly in cash and be interest -free. Secondly, Banks and any organizations should interact with it, who will play the role of an intermediary between state stablecoin and Thai citizens. Thirdly, Bot analysts proposed to establish restrictions on the conversion of a digital bat.

In their opinion, The proposed measures will prevent the competition of the retail digital currency of the Central Bank of Thailand with bank deposits. Banks and credit organizations will be able to maintain the role of an intermediary in the provision of loans, as well as in liquidity management in the financial system. Bot analysts count, that these measures will protect financial institutions from possible negative consequences, related to the introduction of a digital bat.

Bot predicts, that the public demand for retail digital currency over time will only grow. This will lead to that, that in the future it will be used as an alternative to cash and existing forms of electronic money. Besides, Bot revealed the details of the pilot project to launch retail state cryptocurrency and its testing.

The project will be implemented in two directions. The first testing - “Foundation Track” - will begin in the II quarter 2022 of the year. Researchers will check, how can a digital baht can convert in ordinary money, And how it will be used to conduct monetary operations, Including for payment of goods and services.

The second testing - “Innovation Track” - will be more ambitious, as it involves the study of new options for using the digital currency of the Central Bank. The roadmap for this type of testing is not finished yet, since Bot still thinks out the format of the pilot project and evaluates, Who can take part in it.

In June, the Central Bank of Thailand announced the development of a prototype of the new payment system, with which financial organizations will be able to conduct calculations, Using state cryptocurrencies. Previously, the regulator warned, that stablecoins, Thai Batu, are considered "illegal", and the authorities of Thailand will not be able to protect traders from fraud.