Thailand expedites $150 million federal digital bond release
Thailand Prepares to Launch Government-Backed Digital Bond, G-Token
Thailand is set to take a significant step in digitalizing its government bond market with the upcoming issuance of the Government Digital Token (G-Token). This digital asset, a tokenized version of government debt, is planned for release as part of the final tranche of savings bonds for fiscal year 2025.
The Public Debt Management Office (PDMO) is overseeing the issuance, which will complement traditional savings bonds and mark a pioneering move into government-backed digital bond offerings. The sale period for the G-Token is scheduled for late August to early September 2025, with an allocated amount of 5 billion baht.
The G-Token, a digital asset backed by government bonds, aims to broaden public investment opportunities through digital means. The governing regulations for the G-Token are nearly finalized and will closely mirror those for traditional savings bonds, including the application of withholding tax on interest earned.
This issuance is the final borrowing for fiscal 2025, aimed at covering budget deficits. The total bond issuance for the year has been adjusted downward (60–70 billion baht instead of the initially planned 100 billion) due to adequate treasury reserves.
The initial 5 billion baht issue of the G-Token is designed to "test the market." The Thai Securities Exchange Commission (SEC) is developing a digital bond trading system for tokens like the G-Token, which would allow the G-Token and other tokens to be traded on licensed digital asset exchanges.
Investors in the G-Token can expect a higher return than bank deposits, as 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%. The government's goal is to enable retail investors to participate, regardless of their financial standing, through the G-Token issuance. The minimum investment for the G-Token is set at 100 baht, significantly lower than the 1,000 baht minimum mentioned three months ago.
The SEC's digital bond trading system aims to streamline bond issuance, reduce delays, and digitize the entire process including investor registration, trading, and settlement using distributed ledger technology. This system is expected to increase bond liquidity through fractional trading opportunities, positioning Thailand as a progressive player in government digital securities.
Five years ago, the PDMO conducted a pilot of a blockchain bond experiment using the KTB wallet of state-owned Krunghthai Bank, worth around $6 million. Thailand's Ministry of Finance plans to issue a 5 billion baht ($150m) government digital bond within two months.
The issuance of the G-Token reflects Thailand’s strategic push towards greater institutional participation in digital assets, supported by regulatory endorsement. This move is expected to further solidify Thailand's position as a leader in digitalizing government bond markets and expanding public investment modalities.
- The Thai government's move to issue the Government Digital Token (G-Token) marks a strategic push towards greater institutional participation in digital assets, with the aim of broadening public investment opportunities through technology, especially within the retail sector.
- The government-backed digital bond, G-Token, is planned to revolutionize the bond market in Thailand, as it allows retail investors, regardless of their financial standing, to participate with a minimal investment of 100 baht, a significant decrease from the initial 1,000 baht minimum.
- As Thailand prepares for the issuance of the G-Token, the Thai Securities Exchange Commission is developing a digital bond trading system, which utilizes blockchain technology, to create a seamless process for bond issuance, trading, and settlement, with the goal of increasing bond liquidity and positioning Thailand as a global leader in digitalizing government bond markets.
