The Bangko Sentral ng Pilipinas is preparing to introduce a central bank digital currency – what does this mean for the financial sector in the Philippines?
The Central Bank of the Philippines Plans to Introduce Central Bank Digital Currency
According to a source, the Bangko Sentral ng Pilipinas (BSP) is aiming to launch a central bank digital currency (CBDC) within the next two years. This initiative is intended to modernize the Philippines’ financial sector by introducing innovative payment solutions.
CBDC without Blockchain Technology
One key point is that the CBDC will not be based on blockchain technology, unlike some other digital currencies being developed by other central banks. This decision is a result of negative experiences of other institutions related to the use of blockchain in the financial sector.
Development of the Philippine Payment and Settlement System
Governor Eli Remolona mentioned that the CBDC will likely leverage the existing technology supporting the Philippine Payment and Settlement System (PPSS). PPSS is a crucial payment and settlement system in the country, indicating that the BSP aims to integrate the central bank digital currency with the already existing infrastructure.
Application of CBDC
It is known that the CBDC would primarily be used for interbank payments, with only banks being participants in this system. However, final details regarding how the CBDC will integrate with PPSS or the potential independence of this solution have not been precisely defined yet.
The announcement by the Bangko Sentral ng Pilipinas regarding the introduction of a central bank digital currency signifies a step towards transforming the Philippines’ financial sector. CBDC has the potential to significantly simplify and expedite payment processes and positively impact the overall efficiency of the country’s financial system.
