Project Inthanon: Bank of Thailand Pushes Forward with Central Bank Digital Currency

The Bank of Thailand is moving forward with developing a Central Bank Digital Currency (CBDC). The initiative labeled Project Inthanon, has developed a prototype CBDC in partnership with R3 and Wipro (NYSE: WIT). The Bank of Thailand is also working with eight commercial banks in Thailand as part of the development of the CBDC which will decentralize interbank settlements or “real-time gross settlement.”

Wipro is a part of a number of blockchain alliances including R3, the Hyperledger project, the Ethereum Enterprise Alliance, the Energy Web Foundation and the Blockchain in Transport Alliance.

The eight banks included HSBC, Standard Chartered, Thanachart Bank, Siam Commercial Bank, Bank of Ayudhya, Krung Thai Bank, Bangkok Bank, and Kasikornbank.

CBDCs have been a hot topic of discussion within the central banking realm. While some central banks have dismissed the technology, others have indicated more interest in leveraging distributed ledger technology (DLT) to remove friction within the banking system.

Project lnthanon, a proof of concept project, seeks to enable domestic fund transfers within the country’s interbank system by issuing CBDC tokens. Project Inthanon was originally launched in August 2018.  The first phase of the project focuses on building the fundamental payment infrastructure, while the application of blockchain technology for other functionalities will be explored in the subsequent phases.

As part of Phase I of Project Inthanon, a prototype has been developed on Corda, R3’s open source blockchain platform. The solution is said to automate the banks’ liquidity provision for resolving payment deadlocks through Liquidity Saving Mechanisms (LSM). The prototype has reportedly demonstrated that DLT can significantly enhance payment efficiency by enabling 24/7 interbank settlements.

David E. Rutter, CEO of R3, said that more financial institutions are recognizing the potential for digital currencies or CBDCs. Rutter said that R3 ‘s Corda was conceptualized to support CBDCs.

Krishnakumar N Menon, VP and Blockchain Theme Leader at Wipro said,  the prototype has demonstrated the merits of blockchain technology adoption for making interbank payments more efficient.

The Bank of Thailand seeks to position the Thai financial service industry at the forefront of DLT adoption.

Project Inthanon will continue to explore DLT capabilities to enhance the payment infrastructure in future phases.

Phase II will explore the applications of DLT in the areas of bond tokens lifecycle and the atomic Delivery- versus-Payment (DvP) settlements, regulatory requirements related to non-residents, and fraud detection and prevention.

Phase III is expected to extend functionalities of the proof-of-concept for cross-border payment and interoperability with other platforms and the legacy system.

The Bank of Thailand believes that Project Inthanon will encourage other financial institutions to further experiment and develop DLT for other use cases.

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