The Bank of Thailand (BOT) recently released the report of its Retail Central Bank Digital Currency (CBDC) pilot, which it conducted using Giesecke+Devrient’s (G+D) technology solution.
As part of the project, the central bank tested the technological design of a digital version of the baht and its potential for financial innovation.
According to the Bank of Thailand report, the pilot provided four key insights: First, a CBCD is capable of supporting multiple use cases for online and offline retail payments. Secondly, it can also serve as a catalyst for innovation and pave the way for programmable payments. Thirdly, as an open infrastructure, it is accessible to all types of payment service providers, not just banks. Finally, a retail CBDC can increase resilience as an alternative to existing payments infrastructure.
The central bank ran the pilot from late 2022 to October 2023. It used G+D’s retail CBDC solution Filia® to set up an environment for whitelisted payment service providers, retailers and end users. Use cases tested included online transactions via QR codes and wallet ID between individuals and between individuals and merchants. The Bank of Thailand also tested offline payments without a network connection using payment cards. Finally, a hackathon was held to develop innovative use cases for a retail CBDC. First prize went to the “Grow up Wallet” use case, which allows parents to set payment policies for their children using a retail CBDC.
As part of the pilot, G+D’s Filia® solution was evaluated from various technical perspectives throughout the lifecycle of the end-to-end process of issuance, distribution, validation and burning of CBDC. The Filia® solution is specifically designed as a token-based architecture and offers maximum data protection while maintaining stable operation and reasonable performance. Similar to physical cash management, the central bank can guarantee the validity of the digital tokens and verify a transaction without relying on wallet or user information. Filia® also enables easy configurability of programmable payments. Payment service providers can easily integrate the solution into their own systems using the Software Development Kit (SDK). The ability to support consecutive offline transactions is also considered as one of the most important aspects.
While there is currently no concrete plan to officially issue a retail CBDC, the Bank of Thailand will use the results of the pilot in other areas and future studies to improve the payment system. “The BOT believes that the results of the pilot project will be invaluable to the further development of Thailand’s payments infrastructure and will benefit both financial institutions and the public in the future,” the final report said.
“We are very proud that the Bank of Thailand has chosen us as a technology partner for their groundbreaking pilot project,” says Dr. Raoul Herborg, Managing Director CBDC Unit at G+D. “This project has impressively demonstrated that a digital form of public money can promote competition between payment service providers, enable financial innovation and provide efficient and cost-effective services to the public.”
The final report can be downloaded here: Retail CBDC Pilot Program – Final Report
