A total of Fourteen Thai banks have come together to set up and develop the Thailand Blockchain Community Initiative. This move is geared at digitizing letters of guarantee on a blockchain platform that will be shared by all the banks. This new development was announced by the country’s central bank. Letters of guarantee are agreements and contracts which are issued by the bank on behalf of its customers to guarantee payments promises and obligations which the customer has made to trader partners. In 2017, a total of 500,000 letters valued at $43 billion were issued the country’s commercial banking system.
Four leading commercial banks
The top banks in the country Kasikornbank, Siam Commercial Bank, Krung Thai Bank and Bangkok Bank will jointly take part in the new initiative. The initiative will make of Linux Foundation’s Hyperledger Fabric as its main technology platform. According to a statement made by Veerathai Santiprabhob, the Bank of Thailand governor, the shared infrastructure will save the banks from having to invest in their own. He added that sharing of this new infrastructure will help in reducing costs, enhancing efficiency in the whole financial sector and help in the addressing the needs of the business sector and the customers.
Kasikornbank was the first bank to launch and run the group’s blockchain platform in 2017 in partnership with IBM. In Thailand, administering and processing of letters of guarantee can take exceedingly many days. By having these documents digitized and then transferring them to blockchain will significantly reduce on the time taken to process the letters of guarantee to just thirty minutes.
Reducing bureaucracy and complexity
According to Santiprabhob, the Thailand Blockchain Community Initiative is expected to significantly reduce the trouble and complexity of connecting related and similar financial services offered by different banks. It will also assist in the quick and accurate verification of data and reduce risks of counterfeiting. The initiative will also increase security and timeliness.
The Thai central bank will first test the system on its “sandbox” and will use it to issue letters of guarantee enterprise auctions which are owned by the state as well as other domestic trading activities. Siam Cement Group, second largest company in the country and the Electricity Generating Authority of Thailand, a state-owned energy firm are expected to take part in this new initiative.