THAILAND Trends and Developments Contributed by: Wongsakrit Khajangson, Panupan Udomsuvannakul, Koraphot Jirachocksubsin and Pitchaya Roongroajsataporn, Chandler Mori Hamada
mobile banking, has made it easier for consum - ers to make purchases online. This variety of payment options caters to different consumer preferences and financial situations. Advances in cybersecurity have made online transactions safer, boosting consumer con - fidence in digital payments. Secure payment gateways and encryption technologies have reduced the risk of fraud, encouraging more people to shop online. The development of efficient logistics and deliv - ery networks has enabled e-commerce busi - nesses to offer faster and more reliable ship - ping options. This has enhanced the overall customer experience, making online shopping more appealing. Development of Digital Thai Baht The development of the Digital Thai Baht, a form of Central Bank Digital Currency ( “CBDC” ), has been a significant focus for the Bank of Thai - land (BOT) in recent years. The Bank of Thailand ( “BOT” ) has been exploring both wholesale and retail CBDCs, with the Retail CBDC Pilot Pro - gram marking a notable milestone. This initia - tive aims to enhance Thailand’s payment infra - structure, foster financial innovation, and ensure financial stability. Project Bang Khun Phrom, initiated by the BOT, was a pilot phase designed to test the effective - ness and safety of Retail CBDC without impact - ing the overall financial stability of Thailand’s financial system. The project, which ran from late 2022 to the third quarter of 2023, involved limited participation from selected private sector service providers and users. The primary goal was to assess the technological readiness and fundamental functions of Retail CBDC, evaluate its potential for financial innovation, and explore
its feasibility as an alternative payment infra - structure. Retail CBDC Pilot Program The Retail CBDC Pilot Program covered sev - eral key capabilities and benefits. The pilot suc - cessfully tested the core functionalities of Retail CBDC, including top-ups, withdrawals, trans - fers, and payments. The system proved capable of handling various retail transactions efficiently and securely. The programmability feature of Retail CBDC was explored through use cases such as conditional payments and universal escrow. These experi - ments showed that CBDC could enable new financial innovations beyond the capabilities of the existing payment infrastructure. Open access infrastructure: The pilot included both banks and non-bank financial service pro - viders (FSPs), demonstrating that the CBDC system could serve as an open infrastructure accessible to all types of FSPs. This inclusivity could foster competition and innovation in the financial sector. Alternative payment infrastructure: The Retail CBDC system showed potential as an alterna - tive payment infrastructure for retail payments, enhancing the resiliency and efficiency of Thai - land’s payment system. Pilot’s caveats Despite the successful outcomes, the pilot also revealed several challenges that need to be addressed for the broader implementation of Retail CBDC. Retail CBDC’s basic functions provide a user experience similar to existing electronic pay - ments, but this may not be enough to drive
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