Central Bank Digital Currencies of Thailand and Russia

Central Bank Digital Currencies of Thailand and Russia

The XV Regional Conference of Russian Compatriots of Asian Countries "Russia and Asian Countries in the new geopolitical situation: the role of compatriots in international cooperation" was held on September 10-11, 2022 at the Amara Bangkok Hotel, Bangkok, Thailand.

The conference heard a report by Evgeniy Zhukovets, an entrepreneur and member of the Union of Russian Compatriots in Thailand, who leads a number of innovative research projects and developments in Southeast Asian countries, on the possibilities of using Central Bank Digital Currencies (CBDC) developed by Central Banks of Russia and Thailand in cross-border settlements in trade and investment cooperation in connection with plans to create a Russian Foreign Chamber of Commerce, and decided, based on the results of the report, to issue and send to the relevant state bodies and public organizations of the Russian Federation the following technological innovation proposal:

Special Innovative Offer for Cross-border Payments

In the current situation, when settlements in the field of international trade and investment in US dollars, adopted in recent decades, are hampered both by the growing crisis of the US currency payment system itself and by sanctions imposed by Western countries against Russia, many countries are considering alternative systems of mutual payments, including in national currencies.

At the same time, many countries are developing national digital currencies for use in national economies in the process of digitalization of these economies.

This proposal is based on the progress made in a number of countries, including Russia and Thailand, in the development of national digital currencies, which, in our opinion, could be effectively used in cross-border mutual settlements during trade and investment cooperation.

Countries' Efforts to Create National Digital Currencies

According to the press release of the National Bank of Thailand (BOT) No. 39/2022, central banks around the world are paying close attention to the development of Central Bank Digital Currencies (CBDC) and see the potential of retail CBDC as the basis of the future financial system. BOT was one of the first central banks to create a CBDC – a digital Thai baht.

From late 2022 to mid-2023, BOT conducts a basic track on the use of cash-like transactions, such as payment for goods and services, within a group consisting of approximately 10,000 retail users selected by BOT along with three private companies.

Also, the Central Bank of Russia is ready to promote the possibility of cross-border settlements using the digital ruble (CBDC) in conditions when some Russian banks are already actively participating in the experiment on the introduction of the digital ruble, which will last until 2023.

Thus, both Thailand and Russia have pilot projects on CBCD of their national currencies and are starting experiments on putting digital currencies into operation.

Also, according to the Bank for International Settlements (BIS), in 2021 86% of all Central banks in the world have joined the "digital" race to create central bank digital currencies (CBDC).

The Hong Kong Monetary Authority (HKMA), together with the Bank of Thailand (BOT), the Central Bank of the United Arab Emirates (CBUAE), and the Digital Currency Institute of the People’s Bank of China (PBC DCI), today announced the joining of the CBUAE and the PBC DCI to the second phase of Project Inthanon-LionRock, a central bank digital currency project for cross-border payments initiated by the HKMA and the BOT. This joint effort is strongly supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong and the project has been renamed as “m-CBDC Bridge”. The project involves mutual settlements between countries in national digital currencies.

The Proposal

As part of testing the digital ruble platform in 2023, we suggest paying attention to the possibility of using cross-border payments between Russia and other countries for trade and investment transactions, including between private companies.

The planned Russian Foreign Chamber of Commerce can act as an integrator and conductor of these technologies in the member companies of the chamber. In Russia, one of the banks participating in the piloting of the digital ruble has already expressed its willingness to participate in such an experiment.

Also, the Russian Foreign Chamber of Commerce can create a digital platform where companies of Russian compatriots and companies of Russian regions will be able to establish fast and reliable economic ties with the possibility of cross-border payments through digital national currencies.

The main advantages of using CBDC are multiple increases in the transaction speed (instead of 5-7 days with a normal transfer, the transaction time is reduced to a few seconds) and the absence of double currency conversion during the transaction for current payments between banking systems.

Additional Features

Additionally, we suggest paying attention to the potential and format of the new Asean Access platform for establishing business ties, created to stimulate trade within and outside the countries of the Association of Southeast Asian Nations (ASEAN), which was launched in 2022 by the ASEAN Coordinating Committee on Micro, Small and Medium Enterprises (MSMEs).

The official ASEAN online portal for SMEs offers trade and market information, contacts with support services to enter new markets, virtual partner recruitment events, and seminars on building knowledge and skills.

Asean Access positions itself as an information portal to the ASEAN countries, where regional and global companies can enter into a new partnership with companies from the ASEAN region.

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