Jose Teodoro “TG” Limcaoco the new president and chief executive officer of the Bank of the Philippines Islands (BPI) said he supports the Bangko Sentral ng Pilipinas’ initiative to soon issue a central bank digital currency (CBDC).
“That to me will be a very interesting concept. If done correctly, it will go a long way in promoting financial inclusion,” Limcaoco told PhilStar.
Furthermore, Limcaoco said CBDC could become a tool to get rid of ‘underground economies’ because the CBDC allows all transactions to be monitored by the issuing body, which would be the BSP. “It will [also] save the government a lot of money in terms of printing bills and coins. So it’s a very valid proposition,” Limcaoco added.
The same benefit was mentioned by BSP Governor Benjamin Diokno in a press briefing last October 2020. Still, Diokno said that with the Philippines still a cash-prevalent society, this benefit (cost reduction on money printing) is not yet needed, although it will be once digital transactions continue to increase. Diokno further clarified that while the BSP may issue a CBDC in the future, it won’t be within his term, which ends in 2023.
Also, the governor does not see a 100% cashless society happening within his lifetime. “But I can assure you of a coinless society by 2025 because that will be replaced by the QR Code PH which we are pushing to get to our national ID,” Diokno said earlier this year.
CBDCs are backed by central bank reserves directly, in contrast with electronic money, which represents money stored in an account, whether in a bank account or a digital wallet. According to the Bank of International Settlements (BIS), it will be easier to define CBDC by highlighting what it is not: It is a digital form of central bank money that is different from balances in traditional reserve or settlement accounts.
CBDCs are also different from Bitcoin and other cryptocurrencies whose value is not backed by any central bank.
When asked about cryptocurrencies, BPI’s Limcaoco said he does not believe in crypto because it has no legal backing and that there was no economic reason for the value that they have.
“I don’t think crypto is an asset class I personally would invest in, because I do not see any underlying value,” Limcaoco emphasized.
Reports last month surfaced that BPI is no longer allowing transactions related to crypto and is stopping deposits to crypto exchanges. This is a different position from its sister company GCash (both are Ayala companies), which is now considering adding crypto functions on the GCash mobile app.
This article is published on BitPinas: New BPI Head Doesn’t See Value in Crypto, Endorses CBDC Initiative