The Philippine central bank intends to launch a wholesale CBDC that does not use blockchain technology.
The Bangko Sentral ng Pilipinas is preparing to launch a central bank digital currency (CBDC) within the next two years in response to the country’s growing use of cryptocurrencies, local media reported.
Central Bank Governor Eli Remolona Jr. announced the plan on February 12 and said the regulator intended to focus on wholesale CBDC rather than retail CBDC. He added that the central bank has decided to abandon the use of blockchain technology in the project.
Remolona Jr. said the central bank aims to provide a stable and regulated digital currency to improve the efficiency of domestic and cross-border payments.
CBDC and cryptocurrencies
The initiative aims to address the growing interest in cryptocurrencies by providing a more regulated alternative.
The wholesale CBDC model is favored for its potential benefits to operational efficiency in the banking industry, particularly for real-time interbank transactions. This approach is seen as a way to minimize the risks associated with retail CBDCs (such as financial instability during crises).
Internationally, the development of CBDC has received mixed reactions. Financial regulators recognize the potential of CBDC to improve payment systems and reduce the risk of fraud. However, concerns remain about privacy, government surveillance and ensuring equitable access for all populations.
The Bank for International Settlements (BIS) recently noted that while central banks have conducted experiments with wholesale CBDCs, improvements to existing systems are still limited.
However, the Bank for International Settlements has nonetheless decided to make CBDC and the tokenization of financial and real-world assets an important part of its 2024 strategy.
Private issues
CBDC adoption raises questions about privacy and inclusivity, with advocacy groups such as the Electronic Frontier Foundation (EFF) calling for measures to protect individual rights and ensure broad accessibility.
Global trends in CBDC, as well as countries like Sweden and China advancing their projects, provide valuable insights into the Philippines’ own development process.
Governor Remolona mentioned learning from Sweden’s CBDC efforts and said the Philippines’ CBDC will leverage the Philippine Payments and Settlement System (PhilPaSS) to enhance transaction security and reduce fraud risks.
As the Philippines moves forward with its CBDC project, it contributes to a broader discussion about the role of digital currencies in the financial sector. The initiative reflects a prudent approach to embracing new financial technologies, balancing innovation and risk management. #菲律宾 #CBDC
