Bank of Thailand to Set Up Virtual Banks by 2025

The Bank of Thailand has announced its intentions to let virtual banks operate for the first time in Thailand. By 2025, financial institutions will be able to offer services, as reported in a Bloomberg article.

Applications to operate as financial services providers will be made available later in 2023, as per the central bank’s “Consultation Paper on Virtual Bank Licensing Framework.” The goal of the action is to intensify competition while accelerating Thailand’s economic development.

By 2024, the Bank of Thailand will grant interested businesses access to three separate licenses. According to the article, at least ten parties are interested in issuing permissions. 

Under the licensing system, virtual banks will be subject to the same rules and oversight as conventional commercial banks. Additionally, suitable applicants will need to fulfill a number of prerequisites.

The central bank added: 

“Virtual banks should not initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties, nor abuse dominant market position which will pose risks to financial stability, depositors, and consumers as a whole.”

Thailand was Skeptical of Crypto

With this development, it appears that regulators in Thailand are taking note of the advantages provided by the crypto market. It is important to note that the country appeared to be distant from the cryptomarket in March last year, as Thailand’s Securities and Exchange Commission (SEC) announced plans to prohibit the use of digital currencies as payment for products and services in the country. 

The SEC stresses the necessity of protecting the nation from the potential effects of adopting digital currencies as a form of payment on its financial stability and overall economy. 

Additionally, the Bank of Thailand (BOT) was supposed to intensify efforts in October last year to finalize the launch of its central bank digital currency (CBDC). 10,000 regular consumers will test this digital currency for online and offline fund transfers, deposits, and withdrawals.