Thailand’s central bank is looking at smart contracts and decentralized finance (DeFi) implementations for its national digital currency, the digital baht.
Vijak Sethaput, senior developer for the Bank of Thailand’s (BoT) central bank digital currency project Inthanon, discussed the country’s CBDC progress in an interview hosted by a global think tank for central banking, the Official Monetary and Financial Institutions Forum, on Aug. 13.
Sethaput was joined by Sky Guo, CEO of New York-based enterprise blockchain firm Cypherium, which is focused on global CBDC implementations and interoperability.
In the interview, Guo said that global jurisdictions can borrow from the DeFi model to allow qualified parties to issue digital assets backed by real world assets like real estate and stocks, and using them as collateral to secure loans in CBDCs. According to the executive, such developments could bring tremendous liquidity to the economy.
Sethaput said that the central bank is keeping track of recent developments in the DeFi industry, however, before trying to adopt the new technology to Thailand’s native cryptocurrency, the central bank has to solve two main issues around the DeFi — customer identification and privacy.
In the interview, Sethaput stated that smart contract deployment is a key focus for the next phase of the Inthanon project:
“We have explored functionality of the smart contract like Sky has described. We have mimicked the bond lifecycle, so the bond itself can pay coupons and can exchange between the parties, we have something called repurchase, so you can sell it and then you can get it back in another time and also the trading.”
The BoT’s comments come amid increasing hype around the DeFi industry. DeFi is a new tool that is designed to allow crypto entrepreneurs to recreate traditional financial instruments in a decentralized architecture, outside the control of companies and governments. The DeFi industry has been breaking records in 2020, with companies over the globe increasingly pouring money into the crypto sector.
Currently, the total value locked in the DeFi markets clocks in at $5.24 billion, according to data from major industry website DefiPulse.com.
As reported by Cointelegraph, the Bank of Thailand has already deployed its CBDC for financial transactions with some large businesses earlier this year. Apparently entering a new phase, the BoT is now reportedly planning to roll out the digital currency for transactions with Hong Kong's central bank.