Thailand's Multi-Billion Dollar Digital Currency Giveaway

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

The initiative was previously rumored to be financed by borrowing, adding to the country's public debt, but will instead be funded from Thailand's fiscal budget over the next two years. The state-owned Bank for Agriculture and Agricultural Cooperatives will also contribute and provide digital capital to 17 million mothers. The project is projected to increase Thailand's GDP by 1.6%.

Bank of Thailand's pilot retail CBDC launch last year was adopted by 140 merchants, 4,000 consumers and the country's two 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 there is no „immediate plan” for digital bots.

Brunello Rosa, CEO and head of research at Rosa & Rubini Associates, describes the central bank's fallout from last year's CBDC as „the challenge posed by the proliferation of crypto assets and stablecoins over the past few years, but to respond to the official launch of its e-CNY, or digital renminbi, in February 2022.” Developments in China.

However, not all central banks are ready to act on digital currencies. „The European Central Bank and the Bank of England are clinging to their digital euro and digital pound plans,” says Rosa, „and the United States is lagging behind because the central bank fears that any progress in this area will undermine the role of the dollar as the global reserve currency.”

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