Nicholas Anthony
While promises made on the campaign trail often fall to the wayside, officials in Thailand are fulfilling their promises to give citizens 10,000 baht ($281) through digital wallets. However, in addition to the usual problems that come with government handouts, this money is being given out through a digital wallet to leverage programmable restrictions.
The 10,000-Baht Handout
Promises for the 10,000-baht handout picked up steam in 2023, but those plans were delayed due to questions over where the 549 billion baht ($15.61 billion) would come from. However, the government ultimately secured the money after shuffling the 2024 and 2025 budgets as well as passing legislation to raise more money.
Thailand Prime Minister Srettha Thavisin announced the news on July 15, saying that citizens over the age of 16 with incomes under 840,000 baht ($23,710) and savings under 500,000 baht ($14,072) would be able to receive the 10,000-baht payment starting on August 1. If qualified, citizens can apply by downloading the mobile app, agreeing to the terms, supplying their government ID, submitting to facial scanning, and setting up an account.
If approved, citizens must then comply with several restrictions on how the money may be used.
Recipients are only allowed to spend the money within the districts listed on their identification cards, and they must do so within six months of receiving the money. Furthermore, recipients are not allowed to spend the money on gift cards, cash cards, gold, diamonds, gems, oil, fuel, natural gas, electrical appliances, electronic devices, communication devices, lottery tickets, alcoholic beverages, tobacco products, cannabis, or kratom. In fact, recipients are not even allowed to spend the money online, at department stores, or at large chain stores.
Put differently, citizens are only allowed to spend the money on select necessities at local, small businesses.
Still, people have been racing to apply to secure their cut. The Bangkok Post reported that the system crashed because 14.5 million applications came in on the first day (the government said any errors were the fault of users). The next day, likely fraudsters took advantage of the popularity by launching several fake application sites. However, another 10 million people had applied by August 4. In total, the Thai government expects around 50 million people (70 percent of the country) to apply.
Is It a CBDC?
With work at the central bank dating back to 2018, Thailand is no stranger to the idea of central bank digital currency (CBDC). In fact, over the years, the Bank of Thailand has worked with the Bank for International Settlements, launched its own “CBDC Hackathon,” and experimented with its own pilot. It’s also notable that the Bank of Thailand has said one reason to pursue CBDCs is that programmable payments “will help create new financial services that meet the needs of both the public[,] the business sector, and government agencies better.”
But does the current program mark the launch of a CBDC in Thailand? Technically speaking, the digital wallet handout does not appear to be run by the central bank—at least according to what little information has been reported. Rather, the app that hosts the digital wallet is meant to be a “government super app.” It was developed by the Ministry of Digital Economy and Society in collaboration with the Digital Government Development Agency, not the central bank. Furthermore, the digital wallet was built as an expansion of an existing app used for people receiving disability or pension checks from the government. In fact, the app can also be used to check a person’s credit score or social security benefits. So, it does not appear to be a “pure CBDC.”
However, given the nature of the programmable restrictions on how the money is used and that the money must be spent through the official government mobile app, it appears to be a CBDC for all intents and purposes. At the end of the day, it represents a government taking over greater control of both the financial system and each individual’s finances. It’s for this reason that the Human Rights Foundation’s CBDC Tracker considers Thailand to be in the launched phase. However, that could change if the digital wallet is shut down after the six-month window for payments.
Looking Forward
Commenting on the restrictions of the handout in the Financial Times, Cornell University professor and former International Monetary Fund chief Eswar Prasad said that the “limitations seem entirely defensible” but also that the system could prove to be a cautionary tale for CBDCs elsewhere:
These limitations seem entirely defensible but also show how easily digital money can be subverted for social engineering purposes. The Thai government has decided that only worthy individuals can benefit from the programme, must spend the funds in specific areas and cannot purchase products deemed undesirable. It is not hard to envision a future in which CBDC usage is restricted to “good” citizens and “acceptable” expenditures, as deemed by the government.
While I disagree that the restrictions are “entirely defensible,” Prasad is correct that it’s easy to see how these programmable features can quickly get out of hand. Citizens of Thailand are rushing to secure their cut of the handout now, but they may soon find themselves wishing this was one campaign promise that went unfulfilled.