Banking News

MUFG’s Thai banking unit launches blockchain cross-border payments

krungsri

On Monday, Thailand’s Bank of Ayudhya (Krungsri), part of the MUFG group, launched the Krungsri Blockchain Interledger to offer real-time funds transfer between Thailand and Laos. The platform will facilitate transactions in Thai baht and US dollar to boost cross-border trade between the two countries.

In 2017, Thailand and Laos drew up a five-year plan to increase the value of bilateral trade and investment to $10 billion by 2021. As of 2017, the trade value between the two countries stands at $6.17 billion, reported Xinhua.

“Krungsri has confidence in the potential of Laos’ economic growth. Krungsri Research forecasts that Laos’ gross domestic product is to grow at 6.4% in 2019 and 6.5% in 2020. Considering the foreign direct investment in Lao PDR, Thailand is among the top foreign investors in the neighbour country,” said Dan Harsono, Krungsri Head of Retail and Consumer Banking. The bank is the fifth largest in Thailand.

The fund transfer service uses Interledger, the blockchain technology that also underpins cross-border payments network RippleNet. The Krungsri Blockchain Interledger could be a private distributed ledger technology network, given the Interledger protocol was open-sourced as Hyperledger Quilt. The bank had not responded to queries at the time of publication.

In September 2017, Krungsri and Thai oil company IRPC successfully deployed the fund transfer platform for a transaction between IRPC and one of its business partners in Laos. This was after the Bank of Thailand approved Krungsri to develop the blockchain technology under its Regulatory Sandbox.

In May of last year, Krungsri initiated a cross-border payments pilot using RippleNet along with Mitsubishi Corp, MUFG and Standard Chartered.

Meanwhile, Krungsri also has a supply chain blockchain initiative in collaboration with Siam City Cement. The solution comes integrated with AI and is aimed at small and medium-sized enterprises.

Blockchain applications for cross-border payments are gathering pace in the region. Earlier this week, the Monetary Authority of Singapore (MAS) announced the completion of a multi-currency payments trial developed with JP Morgan and Temasek.

The Bank of Thailand is also experimenting with a Central Bank Digital Currency as part of Project Inthanon, named after Thailand’s highest mountain.