The Central Bank of the Philippines plans to launch the Central Digital Currency – without blockchain!
The Central Bank of the Philippines Plans to Launch Central Bank Digital Currency (CBDC)
As reported by Reuters, the Central Bank of the Philippines, Bangko Sentral ng Pilipinas, intends to introduce a Central Bank Digital Currency (CBDC) within the next two years. The central bank’s governor, Eli Remolona Jr., announced the plan on February 12, with a primary focus on the wholesale rather than the retail aspect of this innovation.
Absence of Blockchain Technology in the CBDC Project
By decision of Bangko Sentral ng Pilipinas, the Central Bank Digital Currency project will not be based on blockchain technology, which sets it apart from some other CBDC initiatives. The goal of the CBDC is to introduce a stable and regulated digital currency that will enhance the efficiency of both domestic and international payments.
Focus on Operational Efficiency in Banking Sectors
The wholesale CBDC model in the Philippines may contribute to increasing the operational efficiency of the banking sector, especially for real-time interbank transactions. The Bank for International Settlements (BIS) has recognized CBDC as a significant element of its strategy for 2024, alongside the tokenization of financial and real assets.
Challenges and Benefits Associated with CBDC Implementation
The implementation of the Central Bank Digital Currency raises concerns regarding privacy and accessibility, particularly concerning individual rights protection and ensuring broad access. The Philippines aim to leverage the experiences of countries such as Sweden and China, which are advanced in their CBDC projects.
Utilization of the Philippine Payment and Settlement System (PhilPaSS)
The planned CBDC in the Philippines will make use of the Philippine Payment and Settlement System (PhilPaSS) to enhance transaction security and reduce fraud-related risks. The Philippines’ CBDC initiative contributes to a broader discussion on the role of digital currencies in the financial sector, reflecting a cautious approach to adopting new financial technologies.
