Is CBDC a Step Back? Philippine Crypto Community Shares Concerns and Insights

• Local crypto community expresses reluctance towards accepting Central Bank Digital Currencies (CBDCs) due to concerns over government control and privacy infringement.
• BitPinas’ recent Facebook post prompted community engagement on CBDCs, with a majority of commenters expressing disapproval and citing worries about centralized control.
• Some individuals within the community are more open to the idea of CBDCs if assets remain on decentralized exchanges, but they still raise concerns about transaction tracing and potential bans by centralized exchanges.

Despite the current support the Central Bank Digital Currencies (CBDC) project received from local entities and the government, the local crypto community expressed reluctance to accept the initiative citing privacy concerns.

Local Crypto Community on CBDC

BitPinas’ recent Facebook post engaged the community, questioning their stance on CBDCs and reasons behind it. A majority of commenters expressed their disapproval.

The netizens stated that their main concerns with CBDC are that it would be controlled by the government and that it would infringe on users’ privacy.

“It’s centralized. The reason why crypto is created is to give people the freedom over their finances. That’s also the ultimate goal of Satoshi. If we just accept CBDC right away then what’s the purpose of the goal web3 communities (have) been fighting for years?” a commenter, Seth Abudante, answered. 

Another individual asserted that a decentralized system is more reliable than a centralized one that is monitored and controlled by a single entity.

“For me we only need a PHP-pegged stablecoin or IOU peso token that runs on decentralized blockchain and capable of transacting 24×7 anywhere with or without the internet (by other means of transmission like GSM signal for SMS), it will be good for everyone,” commenter Brivar Vargas Brizuela explained. 

As early as 2021, crypto community pioneer Luis Buenaventura shared his opinion on the matter. He stated that “CBDCs do nothing for financial inclusion,” noting that it might even hinder financial freedom due to increased monitoring, which can lead to censorship. 

“Instead they actually reduce financial freedom because monitoring always implies censorship. So if we ever get to the point where, for example, the Bangko Sentral wants to stop people from buying or selling Axies, they could do so by freezing the digital pesos within their CBDC wallet addresses,” he explained.

On the other hand, some people are quite optimistic about the idea and are open to it, although they still have some worries and reservations.

“Pwede naman why not basta’t nasa DEX yung mga assets mo, kaso lang pwede na nila i-trace yung mga transactions mo so its possible na pwede nila i-banned yung account mo sa kanilang CEX,” commenter Ben Esmero stated. 

[translation: It’s possible, why not, as long as your assets are on a decentralized exchange (DEX). However, the transactions can now be traced, so there’s a chance they could ban your account on their centralized exchange (CEX)]

Commenter Christine Erispe answered yes but noted that she “don’t expect them to be decentralized, but it’s a step forward.”

CBDC Project Overview

A Central Bank Digital Currency (CBDC) is a regulated digital currency issued by a central bank, functioning as a medium of exchange and store of value. Unlike cryptocurrencies, CBDCs are controlled by national monetary policies, trade surpluses, and other central bank regulations. They represent a digital form of traditional currency, distinct from e-money.

On March 2022, the Bangko Sentral ng Pilipinas (BSP) announced that it will roll out a pilot CBDC implementation named Project CBDCPh. By April, the central bank stated that the project will only cover wholesale transactions and will be restricted mainly to banks and other financial institutions. 

Mixed Opinion on CBDCs

Following its launch last year, BSP Currency Policy and Integrity Department Director Eloisa Glindro shared that the Project CBDCPh will continue its pilot phase until 2024, focusing on wholesale CBDC for large value transactions with select financial institutions. 

Prior to this, in late 2022, Diokno, despite announcing the project himself a few months back, stated that CBDCs “is not yet worthwhile for the Philippines.”

Other News on CBDCs

Just this month, the country’s largest bank BDO Unibank, in partnership with Western Union, Accenture, and the Digital Dollar Project, initiated a CBDC pilot study focusing on US-Philippine remittances. 

In 2021, the president and CEO of local bank  Jose Teodoro “TG” Limcaoco, expressed his support for the BSP’s CBDC project. Limcaoco believes CBDCs could enhance financial inclusion and eliminate underground economies by allowing all transactions to be monitored. 

Last October 2022, the Fintech Department of the Reserve Bank of India (RBI) released its Concept Note on CBDC, announcing that the central bank will soon commence a limited pilot of digital Rupee (e₹) for specific use cases.

Priorly, the Bank for International Settlements (BIS) stated that CBDCs, instead of cryptocurrency, are the future of the world’s monetary systems. While the BIS acknowledges crypto’s tech advancements, it sees the digital asset as a radical departure from current systems. 

This article is published on BitPinas: PH Crypto Community Overwhelmingly Not in Favor of CBDC

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.