The Bangko Sentral ng Pilipinas is planning to introduce a central bank digital currency within two years.
Bangko Sentral ng Pilipinas (BSP) plans to introduce a central bank digital currency (CBDC) within two years
BSP President Eli Remolona Jr. informed journalists that he plans to introduce a central bank digital currency (CBDC) within two years. This decision aims to improve the efficiency, security, and resilience of domestic and international payments. However, the retail version of the CBDC, intended for use by the general public, has been rejected.
Decision to introduce wholesale CBDC
President Remolona explained that the decision pertains to the introduction of a wholesale CBDC, where banks will be the only parties conducting transactions. According to him, this is a more efficient solution that will enable the enhancement of the payment system both domestically and internationally. This is based on the experiences of other central banks that attempted to introduce retail CBDC using blockchain technology but without success. BSP has thus decided to base its digital currency on the existing Payment and Settlement System in the Philippines.
Expectations for wholesale CBDC
President Remolona is confident that wholesale CBDC is achievable within his term. He believes its introduction can take place within two years. This will allow for further improvement of payment infrastructure and financial security in the country.
Avoiding retail CBDC
Despite the global trend of central banks introducing digital currencies, BSP has decided not to introduce retail CBDC. Remolona emphasizes that retail CBDCs can accelerate the withdrawal of bank deposits during financial crises. This is an important factor that influenced BSP’s decision to focus on wholesale CBDC.
Central bank digital currencies as an alternative to cryptocurrencies
The introduction of central bank digital currencies is a response to changing market conditions and the growing popularity of cryptocurrencies. Central banks worldwide are striving to develop their own digital tokens, which provide a secure alternative to cryptocurrencies. BSP is joining this initiative, hoping to improve the efficiency and security of the payment system in the country.
Summary
Bangko Sentral ng Pilipinas plans to introduce a wholesale central bank digital currency within two years. While many central banks are experimenting with blockchain technology to introduce CBDCs, BSP is focusing on developing its own token using the existing Payment and Settlement System. This decision aligns with the trend of introducing central bank digital currencies as an alternative to cryptocurrencies, but at the same time, BSP is avoiding the introduction of retail CBDC, which could potentially have negative effects on the financial system during crises. The wholesale CBDC is expected to be introduced within two years, accelerating the improvement of payment efficiency and security in the Philippines.
