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Fourteen Thai banks partner with state enterprises and corporations to launch blockchain initiative

Fourteen Thai banks partner with state enterprises and corporations to launch blockchain initiative

Fourteen Thai banks have joined
hands
with three state enterprises and four large business corporations to
launch the Thailand Blockchain Community Initiative. The Initiative aims to upgrade
business efficiency and competitiveness through the adoption of blockchain
technology.

The first project to be undertaken will be blockchain-based
letters of guarantee (LGs).

The estimated value of LGs issued via the banking system in
Thailand in 2017 was around THB1.35 trillion (US$43 billion). Of this, LGs via
electronic system or e-LG represented only around 15-20 percent. Therefore,
paper-based LGs still dominate in the Thai economy, leading to document
management and cost burdens for both issuing banks and businesses using LGs.

Fully integrating the LG system worth THB1.35 trillion into
the era of electronic documentation through a blockchain network is expected to
reduce operating costs by 50 per cent.

This will also enable LG services to be more efficient,
reliable and secure, with a unified information standard. The use of blockchain
technology via cloud platforms also offers greater flexibility for users
because providing more ways to configure service settings in order to
facilitate transactions and check service status around the clock. 

Because of the collaboration, participating banks will be
able to share the infrastructure and technology without having to individually invest
in development.

For business sector, Thailand Blockchain Community
Initiative will reduce the complexity of connecting to the same financial
services provided by different banks, facilitate data verification on the same
blockchain network, mitigate counterfeiting risks, and improve timeliness as
well as security.

The system is currently being tested in the Bank of Thailand
(BOT)’s regulatory sandbox, which facilitates safe experimentation and the
development of innovative and standardised financial products and services the
benefit of service providers, consumers and the Thai economy. It is expected to
be launched in the third quarter of this year.

The fourteen banks participating in the initiative are: Bangkok
Bank, Krungthai Bank, Bank of Ayudhya (Krungsri), KASIKORNBANK, Kiatnakin Bank,
CIMB Thai Bank, TMB Bank, TISCO Bank, Siam Commercial Bank, Thanachart Bank,
the Bank for Agriculture and Agricultural Cooperatives, United Overseas Bank
(UOB), Standard Chartered Bank (Thai) and the Government Savings Bank

The other seven partners are: Metropolitan Electricity Authority, Provincial Electricity Authority, and the Electricity Generating Authority of Thailand,
PTT Global Chemical, PTT Polymer Marketing, petroleum and petrochemical
company, IRPC and SCG (Siam Cement Group).

Consulting firm, Accenture; law firm, Baker & McKenzie; statutory
government organisation under the National Science and Technology
Development Agency, NECTEC (National
Electronics and Computer Technology Center) and IBM Related technologies will
support the initiative in terms of technology, legal aspects and the overall
picture.

Dr Veerathai Santiprabhob, BOT Governor, said the Bank of
Thailand is delighted to witness the setup of Thailand Blockchain Community
Initiative which will be beneficial to banking and business sectors and a whole
Thai economy.

Mr. Predee Daochai, Thai Bankers’ Association Chairman, said
that the blockchain-based LG service is a starting point toward end-to-end
paperless processes which are highly secure, easy to examine and difficult to
forge. It is better than conventional methods. The LGs on blockchain can be
conveniently examined anytime and anywhere, and each change will be
automatically recorded. The system also allows for further connectivity to
other bank and business networks envisioned for the future.

Meanwhile, Bangkok Post reported
that the Bank of Thailand (BoT) is planning to adopt blockchain technology for bond
issuance and wholesale central bank digital currency, an interbank payment
system. According to the article, BoT has a proof of concept to use blockchain
for a wholesale central bank digital currency project.

In a speech
on BOT’s Policy Direction on FinTech Development at the Bangkok FinTech Fair
2018 Dr Veerathai Santiprabhob highlighted the potential of blockchain (along
with other technologies, such as artificial intelligence and biometrics) to
safeguard financial information, improve identity verification, and reduce the
number and magnitude of financial frauds. 

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