The introduction of their own digital currency by the Philippines is seen as a forward-thinking and innovative move. Such a project could bring many benefits to the country’s economy. However, unlike other countries that have embraced blockchain as the underlying technology for their digital currencies, the Philippines has opted for a different solution.
BSP Governor Benjamin Diokno explained that a blockchain-based CBDC would be too complex and costly for the central bank. Additionally, blockchain technology could create issues with interoperability, scalability, and efficiency. Therefore, BSP has decided to explore the feasibility and policy implications of issuing a CBDC without using blockchain.
This is a significant decision because the Philippines is one of the first countries in the world to consider introducing a central bank-issued and regulated digital currency. However, Sweden and Japan have also chosen different technologies for their CBDCs. It seems that each country is seeking the most effective and sustainable solution for their economy.
Although the Philippines will not be using blockchain technology, some other countries have opted for it. France, Singapore, and Thailand are examples of nations that are currently testing blockchain-based CBDCs in cooperation with the private sector. This makes the Philippines, by taking a different path, currently unique in their approach.
BSP has explained that the essence of the CBDC project for the Philippines is to improve the security and efficiency of domestic and international payments, as well as reduce operational costs and risks. This project aims to facilitate the payment process, especially for households and micro, small, and medium-sized enterprises. Introducing their own digital currency may also increase access to financial services for people living in rural areas and those who do not have access to traditional banking services.
BSP began the feasibility and policy implications study for CBDC issuance in July 2020 and expects to conclude it by the end of 2024. This means that the Philippines have several more years to develop and test the CBDC project before it is rolled out.
The Philippines’ decision to consider their own digital currency is an example of an innovative approach that could pave the way for new solutions in finance and technology. The eventual introduction of CBDC in the country, with full technological support, will bring many benefits to both the citizens and the economy of the Philippines, creating new payment and financial opportunities for all stakeholders involved.