How Digital Money Really Works: Thailand's $12.4B Wallet, Taiwan's Cautious Approach

Thailand's digital wallet program revised to 450 billion baht, targeting 90% of 50 million eligible citizens.

By Mackenzie Crow

7/10, 07:12 EDT
Bitcoin / U.S. dollar
Robinhood Markets, Inc.

Key Takeaway

  • Digital wallets and banks differ significantly; digital wallets offer user-friendly interfaces but involve complex legal and technical structures.
  • Misunderstanding money as a static asset rather than a dynamic debt influences public perception of the banking sector, especially post-2008.
  • Financial technology innovations like Robinhood blur lines between investing and gambling, raising concerns about consumer interests.

Thailand's Digital Wallet Initiative

The Thai government is exploring ways to fund its ambitious "digital wallet" cash handout program without resorting to borrowing. Initially estimated to cost 500 billion baht ($13.8 billion), the program's revised cost is now projected at 450 billion baht ($12.4 billion), as the finance ministry anticipates that no more than 90% of the 50 million eligible citizens will sign up. Deputy Finance Minister Julapun Amornvivat stated, "We may not need to borrow from the Bank for Agriculture and Agricultural Cooperatives as earlier planned," indicating a potential shift in funding strategy.

The plan, which aims to distribute 10,000 baht to each Thai citizen aged 16 and older, is a cornerstone of Prime Minister Srettha Thavisin's strategy to invigorate an economy that has seen an average growth rate of less than 2% over the past decade. Originally scheduled for early 2024, the program has faced delays due to funding challenges and criticism from the Bank of Thailand and some economists over its potential inflationary and fiscal impacts.

Under the revised plan, 284 billion baht will be allocated from the budget for the fiscal year starting October 1, up from the previously planned 152 billion baht. The remaining 165 billion baht will come from spending adjustments and a supplementary budget for the current fiscal year. This approach aims to avoid borrowing and mitigate the program's impact on overall public investment.

Taiwan's Digital Currency Plans

Taiwan's central bank has announced that it has no immediate timetable for launching a digital currency, citing the project's complexity and the need for extensive public communication. The bank has been working on a pilot for a government-run digital currency to enable digital wallet payments without using debit or credit cards. In a report to parliament, the bank stated, "Although the bank currently has no timetable for issuing central bank digital currency, in the process of continuous research and experimentation it is already improving the processing efficiency and innovative application of the payment system."

The central bank plans to hold public hearings and forums next year to spread knowledge about the digital currency, emphasizing the importance of public understanding given the currency's potential widespread impact. Governor Yang Chin-long will address lawmakers' questions on the matter, highlighting the project's long-term nature and the need for thorough public engagement.

Globally, 134 countries representing 98% of the global economy are exploring digital versions of their currencies, with over half in advanced development, pilot, or launch stages. Proponents argue that digital currencies offer new functionalities and an alternative to physical cash, though they have also sparked protests over concerns about government surveillance.

Street Views

  • Patrick McKenzie, Stripe Advisor (Neutral on the banking sector):

    "People both in broader society and financial technology circles are critical of the banking sector, particularly after 2008. It’s not that banks have never done any wrong, but if you assume they’re simply supposed to be guardians that count up the money going in and out of the vault, you would, one, assume they’re getting paid exorbitantly for doing this, and two, ask why we have to keep bailing them out."

  • Patrick McKenzie, Stripe Advisor (Bearish on Robinhood):

    "Robinhood is a gambling app that wears the clothes of a responsible financial institution. It was abundantly obvious from the way they used to talk about the product... where... a large portion of revenue is due to options trades which retail consumers... should not be making."