The Bank of Thailand Sets to Launch New Letter of Guarantee System for Banks

The BOT (Bank of Thailand) has announced that a new blockchain-based Letter of Guarantee system has passed the BOT's regulatory sandbox process and is ready to serve a wide range of participants.

Fazzaco Hall of Fame 2022 Officially Opens (Click to Nominate)!

The project – dubbed the "e-LG on Blockchain" project – involved 18 banks to digitalise the provision of letters of guarantee, which under the traditional paper-based process is often time-consuming and prone to fraud, the BOT said.

The new system uses blockchain technology developed by BCI (Thailand) Co Ltd to create greater transparency in the letter of guarantee process, while speeding up issuance and offering protection against hacking.

Testing in the BOT's regulatory sandbox showed that the new system could reduce letter of guarantee request periods from 3-7 days to less than one hour, and that it enabled enterprise customers to manage letters of guarantee more efficiently.

The system currently has over 100,000 letters of guarantee worth over THB 200 billion (USD 5.3 billion). "The project supervision and technology stability, including IT security, ensures that the new system is truly ready to serve a wide range of services," the BOT said.

The platform has the potential to support a wide variety of other use cases in the future, and can be developed into one of the key infrastructures of the financial sector, the central bank added. "This will enhance the competitiveness of the business sector and Thailand."

The announcement was made at the BOT Digital Finance Conference 2022, held from Wednesday to Friday (27-29 October) last week.

BOT assistant governor Siritida Panomwon Na Ayudhya said the e-LG services will soon be accessible.