The Philippines has joined the long list of countries developing a central bank digital currency (CBDC). Bangko Sentral ng Pilipinas (BSP) issued a press release noting that it is now pursuing the pilot project of a wholesale CBDC.
The BSP says the project, which it names Project CBDCPh, is part of efforts to promote the stability of the country’s payment system. Project CBDCPh will test the use of CBDCs for large value transactions on a 24/7 basis across a limited number of financial institutions.
According to a statement made by BSP Governor Benjamin E. Diokno while speaking at the 14th Annual Group of 24/Alliance for Financial Inclusion Policymakers’ Roundtable discussion at the IMF-World Bank Spring Meetings, the project will be the forerunner of a general-purpose retail CBDC.
“Learnings from the pilot will be critical in constructing the BSP’s medium- to long-term roadmap for more advanced wholesale CBDC projects that shall further strengthen the Philippine payment system,” Diokno said.
He added that the wholesale CBDC might help the country address other financial system problems like issues faced while making large cross-border transfers, risk exposure from using commercial bank money in equities, and operating an intra-day liquidity facility.
Meanwhile, an intersectoral project management team is working on the project. The team is mandated to cover critical areas of the CBDC pilot, including “policy and regulatory considerations, technological infrastructure, governance, and organizational requirements, legal matters, payment and settlement models, reconciliation procedures, and risk management.”
The update is coming after the country previously revealed that it had no plans to release a CBDC soon. Last month, Diokno opined that the Philippines financial system was still very much entrenched in cash transactions, so the BSP was not in a hurry to launch a CBDC.
Digital assets adoption rising among Filipinos
The Southeast Asian country is one of the regions where digital currencies are gaining more prominence. During the pandemic-induced digital assets craze of 2020, experts observed that young Filipinos were among the largest demographic of players of Axie Infinity, a popular play-to-earn game.
Reuters recently reported that Filipinos were among the hardest hit by the over $600 million hacks of the platform. Regardless, the country has been looking forward to becoming a major digital assets hub in its region of Asia.
Significantly, other countries in Asia that have launched a CBDC pilot project include Thailand, Japan, and China. While Jamaica, South Africa, and Nigeria join the cohort from outside the continent.
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