Public Use and Distribution of Retail CBDC: An Evidence from Thailand’s Retail CBDC Pilot Program

Abstract

This paper analyzes the public use of Retail Central Bank Digital Currency (rCBDC) during a pilot program in Thailand. For the first time, it utilizes detailed transactional data, including demographic information of users from a real-world rCBDC pilot. The study empirically examines the behavior of financial service providers (FSPs), individual users, and merchant users in adopting rCBDC for retail payments. The analysis also explores demographic factors and the impact of reward mechanisms on the adoption of rCBDC. Additionally, the paper assesses the effectiveness of a hybrid rCBDC architecture for distributing rCBDC through network topology and empirical analysis. Findings indicate that FSPs manage their rCBDC holdings and liquidity by adjusting redemptions but do not adjust issuances in response to retail payments. Retail users, on the other hand, tend to use rCBDC as a payment method, with usage positively correlated with user age and reward incentives. Regarding the distribution of rCBDC, the network topology analysis indicates that the hybrid architecture tested in this pilot creates a less connected network. rCBDC is distributed sparsely and slowly within the network, relying heavily on a few key FSPs. This suggests the current distribution model is limited in effectiveness and could be improved. These findings provide policy insights, recommending an increase in the number of FSPs in the system, enabling a wider range of business models for FSPs, and introducing new rCBDC use cases across more FSPs, along with targeted measures to enhance rCBDC adoption.