Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. stated that the Philippines plans to introduce a central bank digital currency (CBDC) within the next two years, following other regulators in creating digital tokens to compete with volatile cryptocurrencies.
He noted that the launch may happen sooner than expected, possibly by next year or 2026, aiming to rival unregulated cryptocurrencies.
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CBDC Without Blockchain, To Rival Crypto
Remolona revealed that the country’s CBDC won’t use blockchain or distributed ledger technology despite this development.
“Other central banks have tried blockchain but it didn’t go well.”Eli Remolona Jr., Governor, Bangko Sentral ng Pilipinas
Remolona clarified that with a wholesale CBDC, banks would be the exclusive parties involved, with retail transactions being facilitated through them. The BSP believes this approach could enhance efficiency, safety, and resilience in domestic and international payments. He added that the wholesale CBDCs offer banks an additional avenue, beyond reserves, to deposit funds with the BSP for real-time interbank payments and settlements.
“There are others that have done it, which we can replicate… It’s [what the BSP will use] to rival cryptocurrencies.”Eli Remolona Jr., Governor, Bangko Sentral ng Pilipinas
If Not Blockchain, What Will Power CBDC?
According to Remolona, the technology powering the Philippine Payment and Settlement System (PhilPaSSPlus), the BSP’s real-time gross settlement payment system, is being considered for their use.
In September last year, the central bank said it chose Hyperledger Fabric as the technology backbone for its Project Agila, the pilot wholesale CBDC initiative. According to the BSP, it opted for the firm due to its capabilities in recording, sharing, and synchronizing data and transactions across a distributed network of participants.
At the time, the central bank did not explicitly mention “blockchain” and only referred to Hyperledger as a Distributed Ledger Technology (DLT). However, Hyperledger Foundation acknowledges it as a blockchain technology on its website.
Nonetheless, it must be noted that CBDCs are managed on a digital ledger, which can be a blockchain or not.
CBDC Launch in 2 Years
Remolona confirmed that wholesale CBDC implementation would occur during his tenure as governor and affirmed the possibility of achieving this milestone within a two-year timeframe. He also noted that this is possible through drawing inspiration from the endeavors of other nations.
Consequently, he highlighted his interest in the Swedish e-Krona, which the Central Bank of Sweden defines as a state-backed digital currency. He suggested that the Philippines could gain insights from Sweden as well as China’s progress with its e-CNY project, which is primarily aimed at domestic retail payments.
Project Agila Timeline
December 2020 – The notion of the Philippines establishing its own CBDC initially surfaced in Congress, with the House of Representatives’ Committee on Banks and Financial Intermediaries establishing a technical working group. The group aimed to amalgamate four bills into a single legislative proposal.
February 2022 – Then-BSP Governor Benjamin Diokno underscored that the monetary authority has no immediate intentions of introducing a CBDC, mainly due to the population’s continued dependence on cash, which is supported by the country’s efficient and reliable payment and settlement systems.
March – Diokno’s stance shifted following the release of an analytical note by the ASEAN+3 Macroeconomic Research Office (AMRO), indicating significant interest from various countries in CBDC projects. It was then that he revealed the BSP’s intention to initiate a pilot CBDC implementation called Project CBDCPh
April – The central bank formally confirmed pursuing a pilot project of a wholesale CBDC.
May – The central bank was already in talks to onboard several banks and financial institutions for the pilot testing of the CBDCPh by the last quarter of 2022.
October – The BSP announced again that it is adopting CBDC in response to the United Nations Economic and Social Commission for Asia and the Pacific’s (UNESCAP) recommendation that nations do so as a means of accelerating economic growth.
January 2023 – The then-newly appointed BSP Governor Felipe Medalla affirmed the continuation of the CBDC pilot.
September – The central bank selected Hyperledger Fabric as the technology backbone for Project Agila.
This article is published on BitPinas: Philippines to Launch CBDC Without Blockchain, Aims To Counter Crypto — BSP Chief
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