Exploring a borrowing innovation

The recent cabinet approval of the G-Token seeks to address the shortcomings of traditional savings bond issuance

- WICHIT CHANTANUSORNSIRI

The current monetary system has long served as a medium of exchange for goods, but encrypted digital information systems are challenging that legacy.

Although this form of money is not yet widely used like the monetary system of fiat money issued by governments, the recent approval by the cabinet of the Government Token (G-Token) represents a small but significant step towards familiarising the public with tokens, a type of digital asset.

WHAT IS G-TOKEN?

G-Token is a new digital financial instrument to be issued by the Public Debt Management Office (PDMO) under the Finance Ministry. The token serves as a means of raising funds from the public to offset the government's budget deficit.

Typically the PDMO raises funds by issuing promissory notes, treasury bills and government bonds. With G-Token, the borrowing is via digital tokens issued to individuals who lend to the government. For the public, purchasing G-Tokens is essentially no different from buying traditional government savings bonds.

A digital token is defined in the Emergency Decree on Digital Asset Businesses as an electronic data unit created on an electronic system or network, with the purpose of: defining the rights of a person to participate in an investment in a project or business; or defining the rights to receive goods or services, or other specific rights, as stipulated in the agreement between the issuer and the holder.

This definition includes other rights-representing units as prescribed by the Securities and Exchange Commission (SEC).

The PDMO expects the purchase and sale of G-Tokens, which will be conducted via mobile applications such as Krungthai Bank's Pao Tang app, to gain popularity among younger individuals who recently entered the workforce, as they are generally more familiar with using such apps compared with older generations.