An Indian tech firm is currently developing a blockchain settlements layer for banks in Thailand. The infrastructure will enable the participating banks to form an interbank network that will allow payment settlements using a Central Bank Digital Currency (CBDC).
Thailand is the latest in a growing list of countries actively developing financial protocols built on decentralized ledger technology (DLT). The news is yet another positive development for the Southeast Asian country in its quest to adopt cryptocurrency and blockchain technology.
Blockchain Settlements Layer for Thai Banks
According to Business Insider, Indian tech firm, Wipro is building a blockchain settlements protocol for eight banks in Thailand. This settlements layer will allow the use of cryptocurrency in interbank transactions.
The blockchain infrastructure is part of Project Inthanon – Thailand’s CBDC pilot. Announcing the development in a statement published on Tuesday (May 7, 2019), Wipro said:
“Developed as part of the first phase of Project Inthanon, the solution will enable de-centralized interbank real-time gross settlement (RTGS) using wholesale Central Bank Digital Currency (CBDC) to prove that the technology can perform key functionalities of payment and enhance efficiency.”
For Thailand, the introduction of a CBDC isn’t about creating a new national cryptocurrency but to optimize the efficiency of back-office operations in its banking sector. The overall goal is to reduce the cost of banking by replacing intermediary third-party protocols with trustless systems.
Thai banking regulators also hope the adoption of blockchain technology will improve the security of the nation’s banking infrastructure. Banks in Thailand have suffered data breaches affecting hundreds of thousands of customers.
If successful, the blockchain settlements layer currently being jointly developed by Wipro and R3 could see DLT being employed in Thailand’s interbank settlement infrastructure. Thailand is one of 40 nations actively trying to utilize blockchain technology across several industries.
Recently, reports emerged that Iran’s central bank was in partnership with Areatak, a Tehran-based blockchain startup to create a national DLT infrastructure for the country’s financial sector. Project Borna as it is called in Iran will see commercial banks and fintech startups offering competitive services on a blockchain layer being developed based on IBM’s Hyperledger Fabric.
Thailand Bullish on Cryptocurrency
The news of the blockchain-based interbank settlements layer comes at a time when Thailand is increasingly adopting the emerging digital economy. Since laying the legal and legislative groundwork in 2018, the Southeast Asian nation has continued to lead the way in creating an enabling environment for the cryptocurrency landscape.
As previously reported by Blockonomi, the Thailand Securities and Exchange Commission (SEC) has announced updates to the country’s Securities and Exchange Act of 2019. This amended Act will see the inclusion of security token offerings in the primary market.
In mid-March 2019, the Thai Sec gave its approval for the first Initial Coin Offering (ICO) portal. Rather than clamping down on crypto commerce, Thai regulators continue to focus on building a robust legal infrastructure for blockchain businesses.
Meanwhile, India despite being open to blockchain technology continues to come down hard on cryptocurrency. Unlike other countries exploring CBDC’s the Reserve Bank of India (RBI) shelved its own plans without issuing any details of the study conducted on the matter.
There are even reports that the government is looking to completely ban Bitcoin and other cryptocurrencies. Back in 2018, the RBI prohibited banks from offering services to Bitcoin exchanges leading to the departure of many such companies. The RBI even excluded cryptocurrencies from its recently published fintech regulatory sandbox.