- Digital Baht will soon hit the Thailand economy once the central bank tests its viability and feasibility
- Cryptocurrency wave has prompted the government to take steps for financial inclusion
- Regulations in place to open digital accounts combined with the money laundering law
Thailand is one of the 13 countries to legalise cryptocurrency and move ahead from its counterparts. The second-largest economy in Southeast Asia witnessed a trading volume of $ 2.5 billion on its local exchanges last year.
The Bank of Thailand (BoT) has planned to launch a prototype that will cost THB 10 million to the government. It will be pioneered by German payment company Giesecke and Devrient. The latter has 145 central banks on its client list and is in progressive terms with six of them.
It will follow a different process from China which will distribute red packets containing its own digital currency. Thailand will run the prototype for 2 years before actual implementation in 5 years.
CBDC to boost economy
Centrally regulated fiat currencies have a certain printing cost that needs to be incurred by the government. Moreover, cases of hyper valuation will see the value of the currency diminish in the long term.
Digital currencies will enable faster payments that take place at the speed of information. Financial inclusivity and integration of the unbanked will be of prime importance. It has the potential to create jobs for the citizens that mostly relies on foreign tourism.
Transactions will take place through any digital device while making it easier for the government to monitor and track illegal activities. The retail trading of cryptocurrencies has spiked during the pandemic as it helped investors diversify their investment portfolio and earn better profits.
Regulations and price volatility
Young investors taking uncalculated risk in digital currencies and numerous hiccups at local exchanges have caused widespread turbulence. The regulators have come up with policies that insist investors to be physically present at the time of digital account opening.
The trading turnover in local exchanges jumped to $3.96 billion as Bitkub continues to spread its wings in the country. The income requirements by the SEC were also removed as they were deemed difficult to implement.
Investors have raised concerns that stricter concerns will lead to increase in illegal trading which is not suitable for the economy. The government’s CBDC program will ensure that investor spirits are not dampened and the economy is protected from the clutches of criminals.