Thailand's Ministry of Finance is progressing with plans to issue a 5 billion baht ($150m) government digital bond within two months, Finance Minister Pichai Chunhavajira announced Tuesday.
The so-called "G-Token" will raise funds directly from the public under the current budget borrowing plan, although it isn't classified as a debt instrument, according to Patchara Anuntasilpa, director-general of the Public Debt Management Office, the Bangkok Post reported.
"Investors can invest with a small amount of cash for the new tokens," Mr. Pichai said. "Investors will earn (a) higher return than bank deposits." Thai banks currently offer 12-month deposit interest rates of about 1.25% to 1.5%, below the Bank of Thailand's benchmark interest rate of 1.75%.
A key selling point of the token is accessibility for retail investors. For as little as 100 baht they can buy government bonds, significantly lower than the 1,000 baht minimum when Mr Pichai first mentioned the issuance three months ago. This aligns with the government's goal to "enable retail investors to participate, regardless of their financial standing."
The G-Token isn't Thailand's first blockchain bond experiment. Five years ago, the Public Debt Management Office conducted a pilot of around $6 million using the KTB wallet of state-owned Krunghthai Bank.
Concurrently, Thailand's Securities Exchange Commission (SEC) is developing a digital bond trading system that would allow these and other tokens to be traded on licensed digital asset exchanges. The SEC aims to streamline bond issuance, reduce delays between issuance and trading, and ultimately digitize the entire process including investor registration, trading and settlement using distributed ledger technology.
The initial 5 billion baht issue is designed to "test the market," according to Minister Pichai, with hopes that a larger pool of investors will increase bond liquidity through fractional trading opportunities.