OP-ED: BANGKOK POST- Libra plan calls for care

The social media giant has approached the Bank of Thailand to discuss the possibility of adopting its proposed cryptocurrency in the country.

Siritida Panomwon Na Ayudhya, the Bank of Thailand’s assistant governor for payment systems policy, said on Friday the central bank has set up a team to study Facebook’s digital currency, following the company’s request for discussions.

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It should come as no surprise that Facebook is attempting to promote Libra in Thailand and wider Southeast Asia.

Thailand has 47 million Facebook users out of a population of about 68 million — which means that about 2% of all Facebook accounts in existence are owned by Thais. This is a huge chunk of the population, which further reflects how Facebook is considered an essential part of daily life for most Thais.

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In fact, the entire Southeast Asian region is a huge market for Facebook. The Philippines, for instance, has about 62 million active users, while Vietnam has about 50 million active users.

Adopting Libra as a currency in Thailand presents both opportunities and risks.

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Experts say that Libra can be a great way to expand financial services to the “unbanked” section of the society, as it would allow them to carry out transactions at lower costs. This, they say, will benefit businesses of all sizes as it would help them reach out to more consumers.

On the other hand, it drew curt responses from central banks around the globe, who see Libra as a possible threat to the international financial system.

The Bank for International Settlements (BIS) issued a warning that the currency could shake up the world’s banking system if it becomes too popular. This came only days after Facebook announced its plan to launch Libra.

This is because the digital currency will allow billions of Facebook users to make cross-border financial transactions. Chris Hughes, a co-founder of Facebook, also raised concerns about the social media giant’s move into global fintech, saying that: “If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies. If global regulators don’t act now, it could very soon be too late.”

As the world is moving faster these days, no country, including Thailand, can stand against the march of technological advances.

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The Bank of Thailand is among a few state agencies that have won the trust of the Thais. No one doubts its ability to manage the monetary system — the bank has brought about the country’s high current account surplus and skyrocketing foreign exchange reserves of more than US$200 billion, or around 40% of GDP.

Still, digital currencies are a new and powerful invention that the Bank of Thailand and other central banks around the world have never dealt with. Privacy and security are issues of great concern, if the Libra is to be adopted in Thailand.

It is important that the Bank of Thailand takes precautionary measures to deal with Facebook’s plan. The government must heed BIS’ warning about the advent of Libra, after it said previously that “public policy needs to build on a more comprehensive approach that draws on financial rules, competition policy and data privacy regulation”.