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Hong Kong, Thailand Central Banks Partner up on Digital Currency Initiative

The central banks behind two major Asian economies are partnering on a central bank digital currency. | Source: Shutterstock
The central banks behind two major Asian economies are partnering on a central bank digital currency. | Source: Shutterstock

By CCN: In an attempt to spur collaboration between both regulatory bodies in Fintech and intriguingly a central bank digital currency, the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) have signed a Memorandum of Understanding (MOU).

The MOU, which was signed in Basel on Monday enables both regulators to work together on joint innovation projects, as well as share information, experience and referrals regarding disruptive Fintech businesses.

Central Bank Digital Currency

One key area of collaboration which both parties look forward to working on is a joint project on the issuance of Central Bank Digital Currency (CBDC). While both countries already have individual extensive research and projects on CBDC – Project Lionrock for HKMA and Project Inthanon for BOT – the hope is that the joint effort and information sharing under the partnership will produce better results.

Project Inthanon which aimed at developing a prototype CBDC alongside R3 and Wipro has already partnered successfully with almost ten commercial banks who now use it for decentralized interbank settlement. HKMA’s Project Lionrock, whose goal was to test how well CBDC will fare on a Distributed Ledger Technology (DLT), was carried out alongside the R3 consortium, three-note issuing banks in Hong Kong and the Hong Kong Interbank Clearing Limited. Both projects have had remarkable success and according to the regulators, a joint operation between the projects is currently under consideration.

According to the official announcement by HKMA, the MOU will take move existing partnership between HKMA and BOT to the next level. Explaining what this entails, an excerpt from the announcement reads:

The signing of this MoU not only demonstrates our mutual interests in developing collaborative Fintech initiatives, but also underlines our ongoing efforts in cross-border collaboration between central banks in promoting innovation and enhancing experience sharing. The HKMA looks forward to working together with BOT and seeing the positive outcome from our joint effort.

Common Goals, Strange Bedfellows

While the partnership makes sense on a technical level, some believe that this does not mean that the Thai government is actually willing to embrace decentralisation, but is rather only looking to explore Fintech innovation within a narrowly defined set of criteria. Quoted in the announcement, BOT Governor Veerathai Santiprabhob alluded to the allure of fintech innovation. He said:

Read the full story on CCN.com.