Blockchain, a type of distributed ledger technology (DLT), is gaining momentum in this country, with the Bank of Thailand working with commercial banks and other financial institutions to digitise the financial sector in a big way.
Trust is key in the financial system, while blockchain serves the purpose of efficiency and transparency, so there is a bright future for this technology. The country’s central bank is preparing to use blockchain – a DLT with specific features whose blocks are “chained” on a shared database – for issuing government bonds and digital currency, for example. And commercial banks are joining hands to implement a system of electronic letters of guarantee (e-LG) for their clients.
Besides increased efficiency and transparency, blockchain makes it easier, cheaper and faster to issue bonds, currencies and LGs, among other serviceable notes. At present, the central bank is supporting the Thailand Blockchain Community Initiative (BCI) to help implement the use of this new technology.
Electronic LGs will be used on a trial basis starting next month. Full adoption is expected to start in the third quarter of this year, and over the next three years, about half of LGs in Thailand will likely be in the electronic form. Meanwhile the Federation of Thai Industries and the Thai Bankers Association are preparing to build a national digital-trade platform that will include e-LGs.
At present, about 500,000 LGs are issued annually, requiring more than 25 million pieces of paper and 1.85 million hours spent in their preparation and processing. E-LGs are faster, more secure and cheaper in the long run, helping boost the country’s international competitiveness.
In addition, the Commerce Ministry will use blockchain in issuing certificates of origins and other government services, such as the registration of intellectual property rights and the certification of agricultural products. The Food and Drug Administration (FDA) plans to use blockchain in applications for FDA certificates and auditing to help ensure transparency and increase efficiency, since it will be far more difficult to manipulate or alter data within the system.
In the private sector, Siam Cement Group is working with Siam Commercial Bank to use blockchain to tackle pain points in the industrial conglomerate’s reimbursement system. In politics, blockchain promises to be a powerful technology in boosting the transparency and efficiency of voting in elections, a welcome improvement in light of controversies surrounding the polls this past March. The Election Commission should play the leading role in modernising the voting system and store the crucial data on blockchain to prevent fraud and other unscrupulous activities that can affect the integrity of election results.
Hopefully, the progress of blockchain use in the financial, business and other sectors, as led by the Bank of Thailand and other authorities, will prompt the new government to launch an initiative to study and conduct an experiment on the new technology for use in voting and other related activities. The authorities, however, have to take extra precautions regarding the protection and verification of personal data, given that security and privacy are crucial issues in the digital era.
Published : May 30, 2019
By : The Nation