“Santitarn Sathirathai” policy analysis “Digital money” 10,000 baht

Dr. Santitha Sathirathai, Economist posted on Facebook about the 10,000 baht digital money policy that in the past I had the opportunity to discuss with economists. Financiers and technology people have been discussing the new government's 10,000 baht digital policy for quite some time. Therefore, I would like to write and share new ideas that I have gained in case they are useful.

In summary, I think that this policy has 2 important axes that are tied together. It is trying to kill two birds with one stone.

Axis 1: “Stimulating” the economy is an urgent problem. There are 3 questions that economists often pay attention to:

1.1 What format – will it be distributed to everyone or are there any conditions?

One idea is to instead give it to everyone. Can it be distributed only to people with low incomes and who really need the money? Because this group is probably the group that is most likely to use the money they received. Of course, screening out low-income people can be difficult because more than half of the workforce is outside the system. But one way that might work, as TDRI has proposed, is to filter out "rich people" because information there might be easier to find. Even if some are leaked, at least not every rich person will get it.

1.2 How much – How much money is appropriate?

Now the economic situation is weak. and exports will continue to subside for a long time. Stimulating domestic purchasing power is something that can be done. But the question is whether the amount of money used needs to be as large as 5 million baht (~3% of GDP). One option is to use less than that. and keep fiscal "painkillers" in case in the future the world economy falls ill again, we will still have medicine to take. Of course, if we didn't distribute it to everyone, the budget might be reduced even though everyone would get the same 10,000.

1.3 Where will the money come from – will it have a big impact on the fiscal position?

The concern is where the money will come from. Part of this comes from the fact that this project is a very large project. (more than the investment budget in the entire latest fiscal year) and concerns that if it doesn't increase income/GDP to 5-7% as expected and doesn't increase tax revenue by hundreds of billions, what will happen (for example, if the multiplier Or the multiplier of this fiscal stimulus is not as high as expected - I won't delve into this matter here.)

One way is to reduce the size of this policy a bit, as mentioned above, and may need to create a scenario in case that if tax revenue does not increase as much as expected, where will additional sources of money be found?

Axis 2 “Transform” – Creating a new digital infrastructure. It's a long-term problem. If done well, it will help develop the potential of the economy and policy making in the future.

Some in the tech sector have pointed out that the policy may not only be seen as a short-term stimulus. But the real goal is to set up new digital infrastructure, such as a new national payment system based on Blockchain that is different from the familiar PromptPay-PaoTang.

If viewed from this perspective, handing out money may not just be a short-term economic stimulus, but it is also an incentive to attract people to use the country's infrastructure or what could be called a new digital platform.

2.1 Why Blockchain?

But in truth, the payment systems of PromptPay and Paotang wallet are already very good. Why do we still have to redo it to Blockchain? From talking with experts in this field, using Blockchain has 3 main advantages: Transparency, Security and Programmability.

But in the case of the 10,000 baht policy, many people think that it must be done in a form that does not benefit from the transparency and special security of Blockchain (the technical terms are Private/Permissioned and Centralized Blockchain).

The advantage remains in being Programmability = Money/coupons that can be programmed to have various features, such as must be used within 6 months, must be used in certain areas only, and if you keep thinking about it, in the future you may add additional features. For example, if used for education, it may receive additional privileges, etc.

But from talking with some people on the technology side, they said that programming all of these features can be done without using Blockchain at all (similar to the discount coupons that we use on various online platforms that have conditions and features. No need to use this technology)

In short, it is not clear why blockchain is needed in this case. (I repeat, there may be a reason, but I don't know yet.)

2.2 What is the relationship with CBDC?

The important thing is that while we are paying attention to this matter. The Bank of Thailand is also experimenting with developing its own digital baht, Central Bank Digital Currency (CBDC), which should have similar features. Recently, we have begun to join hands with some commercial banks to allow limited use in general use cases. So I'm not sure how this digital money/coupon will relate to CBDC or can I use CBDC at all?

In addition to having to solve these problems, The government may need to think carefully about whether to prioritize the issue of stimulating the economy or the issue of building new infrastructure. Because killing two birds with one stone is a good idea, but there's a risk of missing both birds with one stone.

Personally, I think there are 3 broad options.

Position 1 focuses on stimulation.

Focus on the issue of stimulating the economy as the main focus. This means that you can use anything that the government and Thai people are already familiar with, fast, and have a supporting system, such as distributing money through the Wallet-PromptPay system as before.

Position 2 focuses on transformation.

The main focus is on building new infrastructure/platforms of the country. Stimulating the economy is secondary.

In this case, it may not require this much money because the money only serves as an incentive for people to use the new platform. And don't rush. A new system may be gradually tested on a limited scale first to learn about the problems and challenges of actual implementation. including communication for people to understand (Because people are not familiar with it)

Position 3 “Hybrid”

It both stimulates and transforms but may take a step back. This can be done in many forms, such as thinking quickly and dividing 10,000 baht into 2 parts. The first part is distributing money through a system that people are already familiar with, mainly ordinary money, not blockchain, emphasizing speed and simplicity to stimulate the economy, and the latter part is coupons. digital, which may not require a lot to attract people to use the new system

By distributing these digital coupons, the government may not have to do it all themselves or through an app. One wallet But let banks and financial institutions that already have wallets that many people use create systems to support these digital coupons and help distribute them to various groups of people.

The advantage is that people who already have these e-Wallets/Mobile Banking and have already completed KYC registration do not need to install a new application. Plus, these apps will compete with each other to create new use cases for these digital coupons.

Of course, this is just an idea. If we help each other think, there will be much better ideas than this.

Again, I write this because I see it as an interesting policy idea that is very important to the Thai economy. Therefore, I would like to invite you to brainstorm together and discuss in a very creative way.