The Bank of Thailand (BOT) announced that its Project Inthanon is heading to its next step, after releasing the outcomes and findings of its Phase II.
As per its announcement, the central bank will work with the Hong Kong Monetary Authority (HKMA) for the project’s third phase to explore interoperability among ledgers to attain cross-border funds transfer, including business modality and pertinent foreign exchange policy application, in a bid to lessen cost and boost efficiency.
Project Inthanon, which is a joint project of the BOT and financial institutions, wants to use blockchain technology to improve the country’s financial infrastructure and create an ecosystem supportive of technological learning and advancement.
The project’s second phase, which ran from February to June, explored DLT implementation in two areas. The first one is the implementation of a decentralised delivery-versus-payment (DvP) mechanism for interbank bond trading and repurchase transactions in order to understand how the future DLT-based financial market infrastructure could operate and help enhance post-trade operational efficiency.
The second is the incorporation of regulatory compliance and data reconciliation functionalities into the payment process on a distributed ledger in order to enhance process efficiency and mitigate operational and compliance risks.
Based on its findings, the central bank said that distributed ledger technology (DLT) can enhance the efficiencies of bond trading and repurchasing activities, such as coupon payment and interbank outright trading. It added:
"Process automation using smart contracts demonstrated capabilities that can help improve post-trade operational efficiency as well as liquidity management. In addition, the end-to-end third party funds transfer workflow was redesigned to prevent fraudulent transactions by allowing the senders to check beneficiary information before submitting the transactions. The new workflow also enabled involved parties to track the status of the transactions, improving the transparency."
Earlier this year, it also completed Project Inthanon’s Phase I, which aimed to leverage blockchain technology to allow domestic fund transfers within the country’s interbanking system by utilizing the central bank digital currency (CBDC) tokens.
Phase III is scheduled to begin next month and conclude during the fourth quarter of this year.
Meanwhile, speaking at the Bloomberg ASEAN Business Summit last July 12, Governor Dr. Veerathai Santiprabhob said that BOT is reviewing blockchain applications in different areas, including cross-border payments, supply chain financing, and document authentication.
“Adoption of modern technologies like biometrics and blockchains can help safeguard financial information and reduce the number and magnitude of fraudulent activities,” he said, adding that the central bank is also reviewing policies to cater to the upcoming innovations.