The Philippines is a step closer to launching its wholesale central bank digital currency (CBDC) project following the selection of distributed ledger technology (DLT) Hyperledger Fabric as the primary system which the initiative will be built upon.
Dubbed Project Agila, the Bangko Sentral ng Pilipinas’ (BSP) CBDC project has been in the works since economic powerhouses began exploring the potential disruption of tokenized fiat currencies.
While CBDCs remain controversial, with critics claiming they may be used to regain control of the market that is now being slowly dominated by digital currencies, the BSP believes its inception would be beneficial to financial institutions and the local economy, which is being fueled by remittances from Overseas Filipino Workers (OFWs).
“Project Agila aims to orient the BSP and participating financial institutions on CBDC technology solutions that have the potential to enhance the country’s large-value payment system,” the BSP said upon disclosing the latest development.
The central bank said that with Hyperledger Fabric, future users of CBDCs can be assured that their transactions are recorded securely on-chain.
“This would be a useful mechanism for testing Project Agila’s use case scenario of enabling inter-institutional fund transfers even during off-business hours (i.e., evenings, weekends, and holidays) or when PhilPaSSplus is unavailable,” the BSP noted, adding that sharing and synchronizing of data are also possible with the use of the network.
While DLT works similarly to blockchain technology, the latter is more innovative and is an ideal network to promote inclusion due to its permissionless nature.
With the BSP using DLT for Project Agila, this means that only selected participants will be able to have access to it.
During the initial construction of its CBDC plan, global tech firm nChain has extended its support in crafting a CBDC that is suitable to the Filipino community, even participating at last year’s Philippine Blockchain Week to help get locals informed on what tokenizing fiat entails and its benefits.
Apart from getting nChain’s support, the central bank has also sought the help of multilateral organizations, such as the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) Innovation Hub, on analyzing other aspects of CBDCs.
The BSP has yet to announce the target launch for Project Agila but has unveiled a list of financial institutions participating in the initiative, which include BDO Unibank, Inc. (NASDAQ: BDOUF), China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corporation, Union Bank of the Philippines, and Maya Philippines, Inc.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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