Thailand’s Multibillion-Dollar Digital Currency Giveaway

Thailand, which launched a major pilot retail central bank digital currency (CBDC) last year, is following up with a pioneering digital token payout to 50 million lower-income citizens, aimed at encouraging them to spend in their local communities. The 500 billion-baht ($13.7 billion) plan was announced last month by Prime Minister Srettha Thavisin and is set to launch at the end of this year.

The initiative was earlier rumored to be funded by borrowing, adding to the country’s public debt, but instead will be financed out of Thailand’s fiscal budget over the next two years. The state-owned Bank for Agriculture and Agricultural Cooperatives will also contribute, providing digital capital for an additional 17 million Thais. The program is predicted to boost Thai GDP by up to 1.6%.

Last year’s pilot retail CBDC launch by the Bank of Thailand was embraced by 140 merchants, 4,000 consumers, and two of the country’s largest banks and was hailed as an effective tool to promote innovation and foster competition among financial service providers. However, the central bank recently announced that it has no “immediate plan”’ for a digital baht.

Brunello Rosa, CEO and head of research at Rosa & Roubini Associates, describes the central bank’s plunge into CBDC last year as a response “to the challenge posed by the crypto assets and stablecoins that proliferated over the last few years, but also to respond to the advancements made by China, which officially launched its e-CNY, or digital renminbi, in February 2022.”

Not all central banks are so ready to act on digital currencies, however. “The European Central Bank and the Bank of England are catching up with their digital euro and digital pound projects,” Rosa says, “while the US lags behind as the Fed fears that any advancement in this field may destabilize the role of the dollar as the global reserve currency.”    

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