Editing by Nathaniel Cajuday
“Central Bank Digital Currency (CBDC) is not yet worthwhile for the Philippines.”
The Secretary of the Department of Finance (DOF) said this in the recent Senate Session of the Committee of Finance regarding the proposed budget of the department as well as its attached agencies for 2023.
It can be remembered that the Bangko Sentral ng Pilipinas (BSP), the country’s Central Bank, which Diokno previously headed as Governor, conducted research on CBDCs, with a planned pilot test in Q4 2022 for wholesale transactions (as opposed to retail transactions).
CBDC is a form of electronic money that is backed by the central bank reserves, as opposed to present versions of digital money in anyone’s bank accounts or mobile wallets.
During the Senate Session, when asked by Senator Francis Tolentino about the status of the CBDC research, Diokno said that while they studied it in parallel with other countries, they concluded that because the country already has two national payment railways – InstaPay and PESONet, the BSP deemed it to prioritize to make them more efficient and effective as settlement systems first.
“The results of our study is that let’s focus on InstaPay and PESONet first before we go to CBDCs,” Diokno told the Senate.
InstaPay and PESONet are the two national payment railways used to transfer money between accounts from different financial institutions. Filipinos can use InstaPay to transfer money up to ₱50,000 between accounts, while PESONet can be used for amounts greater.
Besides, Diokno also explained that one of CBDC’s advantages – wherein there is no longer a need to print money – people are already using InstaPay and PESONet to send money without touching physical cash.
“It’s working very well. Nowadays, you even no longer need to issue checks,” Diokno added.
On the other hand, when pressed if the CBDC plan was aborted, Diokno said no, and that the study was completed. Only that “the results of the study suggest it [CBDC] is not yet worthwhile.”
“This is not the right time for CBDCs,” Diokno categorically stated.
The notion of central bank digital currency (CBDC) has gained prominence in recent years as a means of making financial transactions more efficient and cheaper. Sen. Tolentino cited other countries like the Bahamas and Jamaica that are implementing CBDCs through the blockchain.
However, Diokno stated that because the Philippines’ size and economy are not comparable to these countries, their experience with CBDCs will be different.
“The technology (Blockchain and CBDC) is fine, we’re not disputing that. But the countries – Bahamas and Jamaica – I’ll be careful (in comparing). We’re not comparable to those two small countries )
This article is published on BitPinas: DOF Chief Diokno: This is Not The Right Time for CBDCs
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.