On Monday, the Bank of Thailand released a 29-page report about its latest central bank digital currency (CBDC) trials. It developed a proof of concept (PoC) to enable corporates to use a digital baht for payments which integrated with the highly successful procure-to-pay solution (B2P) from the Siam Cement Group (SCG).
The conclusion was that overall the experiment proved the potential benefits, but that performance is a concern and the technology is not ready for live production.
As a next step, the central bank plans to explore a more consumer-focused CBDC in 2021 and 2022.
The corporate payments PoC involved Siam Commercial Bank subsidiary Digital Ventures (DV), which was involved in the original development of the SCG procure to pay (B2P) solution. Ethereum development house ConsenSys provided technical support for the CBDC solution, which used the Hyperledger Besu enterprise blockchain.
Typically the B2P platform empowers suppliers to finance their invoices because the supplier has approved it. However, B2P only offers a limited selection of banks. Hence, integrating with a CBDC solution could potentially increase the range of banks beyond those that are B2P participants.
Most CBDC tests focus on distributing the digital currency via banks, using it for payments and destroying coins no longer needed. For this PoC, additionally it involved tokenizing invoices. The Ethereum-based CBDC blockchain had to interoperate with the B2P procure-to-pay solution that uses R3’s enterprise blockchain Corda. Plus, using smart contracts enabled conditional payments.
We had assumed that the only tokens would be CBDC money and the invoices. But to create programmable money, there was an additional step. The corporate would create custom tokens as programmable money, and these are matched by CBDC that they’ve paid for. So the custom tokens are transferred to the supplier as payment. When the condition in the custom tokens is met, it converts into CBDC and the custom token is burned.