The Bangko Sentral ng Pilipinas (BSP) is on track to conclude its pilot run of the wholesale
central bank digital currency (CBDC) project by the end of this year.
In a press briefing, BSP Deputy Governor for Payments and Currency Management Sector Mamerto Tangonan shared insights into the progress of the CBDC pilot.
“For CBDC, our timeline for that is to complete the pilot this year, towards the end of this year,” Tangonan said.
Revival of CBDC with Project Agila
Last September, the BSP announced the revival of the CBDC project, now referred to as Project Agila, which was initially introduced in 2022.
Former BSP Governor Benjamin Diokno, who has since assumed the role of Finance Secretary, advocated for prioritizing the existing digital payments system over pursuing CBDC. CBDCs, as defined by the central bank, are digital forms of currency denominated in the national unit of account and are direct liabilities of the central bank.
Wholesale CBDC a priority, retail out of the picture
In February, BSP Governor Eli Remolona Jr. said that the central bank will roll out wholesale CBDC, which will be deployed on the BSP-owned Philippine Payment and Settlement System (PhilPaSSplus).
Wholesale CBDCs, according to the central bank, could be issued to commercial banks and other financial institutions to facilitate interbank payments, securities transactions, and cross-border payments, among other functions.
However, Remolona clarified that the Philippine central bank would not develop a retail CBDC for the local market.
He added that the wholesale CBDC will be deployed on a custom-built infrastructure independent of blockchain technology.
Pilot run serves as a learning exercise
Tangonan explained that the pilot run of the BSP’s CBDC project “was designed as a learning exercise to better assess whether this technology lives up to its claims.”
“So we are piloting it, testing it with the six other domestic financial institutions,” he added.
6 banks participate in Project Agila
Participating in the pilot project are BDO Unibank Inc., China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corporation, Union Bank of the Philippines, and Maya Philippines Inc.
“We are using it to transfer funds among these financial institutions. But we also aim to explore if this wholesale CBDC can support higher value-adding services like securities settlement,” Tangonan said.
He further expressed a vision for democratizing access to securities and similar investment instruments in the Philippines, allowing individuals from various backgrounds to own securities with smaller issue sizes and reduced fees.
Potential nationwide launch
The BSP Governor earlier indicated that following the conclusion of Project Agila’s pilot run, the central bank and the banking sector will evaluate the potential launch of wholesale CBDCs nationwide.
Project Agila aims to familiarize the central bank and participating financial institutions with CBDC technology solutions that could enhance the country’s large-value payment system, according to the BSP.
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.
Watch: Blockchain provides perfect foundation for CBDC
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