The Bank of Thailand’s ongoing Retail CBDC pilot project (digital baht) focuses on conducting pilot tests through foundational and innovative tracks. For the foundational track, deep technical tests were conducted prior to the start of the pilot, whereas for the innovation track, a hackathon was organized to explore innovative use cases from the private sector. The pilot: The Bank of Thailand initiated a canteen pilot for its retail CBDC during the start of 2023 with a restricted user base. The pilot achieved a significant milestone by successfully minting and distributing CBDC to three Financial Service Providers (FSPs)*. Currently, the project is advancing towards an expansion of users, which is limited to the officers of three FSPs, with up to 10,000 users. The CBDC technology is provided by German technology partner Giesecke+Devrient. Integration with existing payment systems: The integration with existing payment systems focused on enabling connectivity process with interbank electronic fund transfer system (RTGS) operated by the Bank of Thailand and establishing interoperability between FSP’s payment system and payment processors. Use: The pilot programme is conducted in various retail scenarios, specifically aiming to facilitate everyday purchases such as those made in canteens and coffee shops for bank employees. The focus of the pilot is on small-scale transactions in a retail setting. Privacy and security: Thorough penetration tests were conducted to assess technical readiness for production, with the aim of minimizing security risks to the business and ecosystem. The importance of security-by-design of a CBDC was a focus point of the project. User experience: The pilot aims to provide a smooth and user-friendly experience for digital baht users. Mobile apps have been developed by financial service providers to facilitate transactions, allowing users to easily send, receive and manage their digital currency. Priorities: Recognizing the already high adoption of digital payments in Thailand, the Bank of Thailand envisions the CBDC as a transformative solution. This pilot aims to establish an inclusive and accessible financial infrastructure, enabling innovative and secure financial services to cater to the diverse needs of customers across the country. Implementation: Collaborative partnerships with stakeholders, gradual user onboarding, robust security measures, scalability and flexibility, and ongoing evaluation were essential components of the project’s success. These factors ensured a smooth and effective implementation process, providing valuable insights for future initiatives. Public-private collaboration: Collaborative partnerships brought expertise, innovation and resources, enhancing project success. Effective communication, trust-building and clear roles were crucial for productive collaboration. These lessons emphasize the importance of ongoing public-private cooperation in future initiatives to leverage diverse skills and resources for success. Communication to stakeholders: Learning on both technical and business aspects from CBDC pilot testing is the main objectives of this project. The plan to launch CBDC in Thailand has not yet decided at this stage. This intention should be passed forward to all stakeholders including end-users. Clear communication is important to ensure a common understanding of a CBDC by all stakeholders, but management of expectations is an important aspect of this. The BOT Retail CBDC pilot project’s successful continuation showcases effective collaboration, technical implementation and regulatory clarity. Valuable lessons learned from challenges encountered provide insights for broader scalability and adoption, serving as a guiding example for future initiatives. *FSPs are comprised of bank and non-bank in this pilot. CA S E S T UDY 2 Thailand: digital baht Central Bank Digital Currency Global Interoperability Principles 18
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