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DAVOS, Switzerland — Thailand has been working on a retail central bank digital currency (CBDC), with an initial pilot planned for the second quarter of 2022, but the pilot was postponed to the fourth quarter of this year.

The pilot, or trial of the retail CBDC, which is designed for use by consumers, is expected to test deposits, withdrawals and transfers. A central bank official said last August that the retail CBDC will be tested as an alternative payment method for “cashlike activities within a limited scale.”

Earlier this year, Thailand also revealed plans to regulate crypto as a payment method, announcing in March that it will ban the use of crypto in payments.

CoinDesk spoke to the governor of Thailand’s central bank, Sethaput Suthiwartnarueput, about the bank’s plans for a retail CBDC and why the pilot was delayed following a panel, titled “Central Bank Digital Currencies,” last week at the World Economic Forum’s annual meeting in Davos, Switzerland.

The following has been lightly edited for brevity and clarity.

CoinDesk: Thailand’s CBDC pilot was planned for the second quarter of 2022, but it has been delayed. What’s the latest on the project?

Suthiwartnarueput: It was just moved back a bit. This is the usual when trying to get alignment. We did a lot more consultation with stakeholders to make sure that we got the design right for the pilot. So yeah, that would be in the fourth quarter of this year if we could get it out. It will probably go on for about six months. But it's a limited scale pilot. We just want to make sure that we do it end to end, get the types of players that we want involved, both banks and nonbanks. We see question marks on how soon a retail CBDC might go production scale. But when that happens, it will warrant infrastructure, rather than a product because central banks aren’t good at coming up with products that can resonate with customers. And so we see it as putting in place the infrastructure that the private sector can innovate on, making sure that whatever platform they innovate on is controllable. I think it was the central bank governor of France who mentioned that the private sector is much better at the innovation side, that they're much better at the consumer-facing side than central banks. I think that ultimately, a retail CBDC will coexist with other stuff. Yes, it will probably replace cash. But not the other stuff that's still out there, including private stuff. That's kind of how we see it. The reason I went there and mentioned nonbanks was because we think we need to have new players involved in the space and as part of this pilot.

When central banks start exploring retail CBDCs they suddenly realize there are a lot of aspects to think about, but we don't really hear too much detail on some of these challenges that they have faced. It’s usually vague terms like “design” or “underlying technology” but what does that really mean for consumers?

Again, it gets back to that point that was raised during the panel that we want to be clear about what problem we're trying to solve and think about the benefits of it. The existing system works pretty well on payments, if we have a fast payment system [that] works very well. So the additional incremental benefits you would get from using a retail CBDC for payments are not immediately known. So it's important again, to get it right, rather than get it out quickly. But if you asked me whether we are still pursuing it, exploring it and making sure that we're ready, the short answer is yes. Why? Because even though fast payment systems can offer us a lot of low-hanging fruit that we can take advantage of, we recognize that there are limitations from an innovation standpoint. CBDCs and retail CBDCs offer more potential for the private sector to get involved, innovate. You can't put programmability on a fast payment system. It wouldn't work. There are a lot of possible questions both in terms of benefits, making sure that the risks can be addressed, and exploring unintended consequences. A retail CBDC is not insignificant, so that's why we're proceeding steadily.

In terms of the private sector building on a retail CBDC, what does it mean for Thailand? Do you see commercial banks issuing a digital currency on behalf of the central bank for instance?

That you will find out during the upcoming pilot.