THAILAND Trends and Developments Contributed by: Wongsakrit Khajangson, Panupan Udomsuvannakul, Koraphot Jirachocksubsin and Pitchaya Roongroajsataporn, Chandler Mori Hamada
widespread adoption. The design and position - ing of Retail CBDC should consider public needs beyond its current capabilities. Establishing appropriate governance models for common CBDC functionality and aligning rele - vant laws and regulations will be crucial for the future launch of Retail CBDC. Coordination with various government agencies will be necessary to address legal and regulatory considerations. Non-bank financial service providers faced transaction fees when exchanging Thai baht with the Retail CDBC during the pilot. Sustain - able business models for these providers must be explored to ensure their active participation in the Central Bank Digital Currency ecosystem. The pilot tested offline CBDC capabilities using physical smartcards. However, challenges such as connectivity issues and potential cyber threats need to be addressed to enhance confi - dence in offline transactions. The development of the Digital Thai Baht in 2024 represents a significant step towards modern - ising Thailand’s payment infrastructure. The insights gained from the Retail CBDC Pilot Pro - gram will inform future initiatives and projects, potentially enabling greater access to innova - tive financial services at a reasonable cost. The BOT’s ongoing efforts to explore and develop CBDC technology underscore its commitment to fostering financial innovation and ensuring the stability and efficiency of Thailand’s finan - cial system. Virtual Bank Development in Thailand Thailand is set to transform its banking sector by introducing virtual banks, an initiative led by the BOT to enhance financial inclusion and foster innovation. This move aims to serve the
unbanked (18%) and underbanked (45%) seg - ments of the population, as well as SMEs, which face difficulties in obtaining loans from tradition - al banks. Virtual banks aim to bridge this gap by leveraging digital technologies to offer alterna - tive financial solutions. The BOT has outlined a comprehensive licensing process for virtual banks, which began with the publication of a Consultation Paper on Financial Landscape in 2022. The application period for virtual bank licenses opened in March 2024 and closed on 19 September 2024. Five consortiums submitted their applications for three available licenses, and the BOT is expected to announce the successful applicants by mid-2025. These applicants will then have one year to prepare and commence operations, with the virtual banks anticipated to be operational by mid-2026. The five consortiums vying for the three available virtual bank licenses include some of Thailand’s and the surrounding region’s most prominent business groups, as outlined below. • SCB X, the holding company of Siam Com - mercial Bank, in collaboration with WeBank (China) and KakaoBank (South Korea). • Gulf Energy Development, Advanced Info Service (AIS) and Krungthai Bank Plc (KTB). • Under the Charoen Pokphand (CP) Group, Ascend Money partnered with Ant Group, a leading FinTech firm of Alibaba Group (China). • Sea Group, the operator of Shopee, in col - laboration with Bangkok Bank, Thailand Post, Sahapat Group, and VGI (a BTS Group Hold - ings subsidiary). • Lightnet, in collaboration with WeLab, a lead - ing virtual bank operator in the Asia-Pacific region.
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