Saturday, December 07, 2019

Second phase of Project Inthanon a success: BOT

Jul 18. 2019
Photo by: BOT
Photo by: BOT
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By The Nation

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The second phase of Project Inthanon has clearly illustrated that Distributed Ledger Technology or DLT can help enhance the efficiency of bond trading and repurchasing activities through the bonds’ life cycles, which include coupon payments, interbank outright trading and repurchase transactions, the Bank of Thailand or BOT states in its report released on Thursday.

 

Project Inthanon is a collaborative project between the BOT and commercial banks that aims to explore potential benefits of the technology in enhancing Thailand’s financial infrastructure as well as to develop an ecosystem that supports technological learning and advancement.

The BOT along with eight leading financial institutions and technology partner; R3, had conducted Project Inthanon Phase II from February to June. The latest phase was built upon Project Inthanon Phase I and involved collaborative designing, developing and testing a proof-of- concept (POC) of the decentralised Real-Time Gross Settlement system by using the wholesale Central Bank Digital Currency (CBDC). Project Inthanon Phase II was driven by business use cases in order to solve current business pain points and improve efficiency in the settlement system. 

The scope of Phase II included 2 key areas: Delivery-versus-Payment (DvP) for interbank bond trading and repurchase transactions, and regulatory compliance and data reconciliation for third party funds transfer.

BOT reports that the outcomes and findings of Project Inthanon Phase II have shown that process automation using smart contracts has 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.

The outcomes and test results from Phase II will provide crucial fundamental for the development of Thailand’s financial infrastructure.

The eight financial institutions are Bangkok Bank, Krung Thai Bank, Bank of Ayudhya, Kasikornbank, Siam Commercial Bank, Thanachart Bank, Standard Chartered Bank (Thai), and the Hongkong and Shanghai Banking Corporation Ltd

For Project Inthanon Phase III, the BOT will collaborate with the Hong Kong Monetary Authority (HKMA) to explore the interoperability amongst ledgers to achieve cross-border funds transfer including business modality and implementation of relevant foreign exchange regulations, aiming to reduce associated costs and enhance efficiency.

Project Inthanon Phase III is expected to start in August and should be completed by the fourth quarter of this year, after which the BOT together with the HKMA will \publish a joint project report on the results.

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