Philippines Set to Launch Wholesale Central Bank Digital Currency (CBDC) in Two Years
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Modified on: Tue, 13 Feb, 2024 at 1:50 AM
The Philippines is on course to become a major player in the digital currency arena as the Bangko Sentral ng Pilipinas (BSP) plans to introduce a wholesale central bank digital currency (CBDC) within the next two years. In contrast to some other central banks' approaches, the BSP's CBDC will function without blockchain technology and will operate on a payment and settlement system owned by the central bank. The move is set to transform the country's financial landscape and strengthen its position in the global digital currency market.
The Governor of the Bangko Sentral ng Pilipinas (BSP), Eli Remolona, has disclosed the central bank's ambitious plan to unveil a wholesale central bank digital currency (CBDC) within the next couple of years. The initiative aims to revolutionize the country's financial sector and position the Philippines as a key player in the global digital currency market.
Remolona emphasized that the CBDC project will be distinct from those of other central banks as it will not be based on blockchain technology. Instead, the CBDC will operate on a payment and settlement system managed by the central bank, signaling the BSP's innovative approach to embracing digital transformation in the financial realm.
The central bank is focused on developing a wholesale CBDC that will be mediated by banks. This strategic move is designed to address potential issues associated with retail CBDC, including disintermediation, bank runs during financial stress, and an increased central bank footprint. By choosing the wholesale model, the BSP aims to ensure that banks are the only counterparties, with retail transactions riding on their infrastructure. This carefully considered approach reflects the BSP's commitment to mitigating potential risks while embracing the benefits of digital currency.
Remolona highlighted the examples of Sweden and China as models for the Philippines, commending their development of CBDCs as digital complements to cash and even "rival cryptocurrencies." Drawing inspiration from these successful initiatives, the BSP is gearing up to replicate their experiences in the digital currency landscape.
The governor was unequivocal about the CBDC's implementation, stating that it would definitely materialize within his term in office and confirming the possibility of its launch within the next two years. This commitment underscores the BSP's determination to lead the way in the digital currency sector and position the Philippines as a hub for innovation and modernization in the financial system.
The BSP's stance on digital currency is part of a broader strategy to fortify its regulatory framework. In December 2023, the Philippines Securities and Exchange Commission (SEC) reasserted its ban on unregistered activity by foreign cryptocurrency players, demonstrating the country's rigorous approach to addressing regulatory compliance in the crypto industry.
The announcement of the BSP's wholesale CBDC initiative sets the stage for the Philippines to emerge as a significant player in the global digital currency landscape. By leveraging this opportunity, the country is poised to realize its vision of a modern, tech-savvy, and dynamic financial ecosystem that champions innovation and sets new benchmarks in the digital currency arena.
With a focus on enhancing financial inclusion and embracing advanced technologies, the Philippines is committed to redefining its role in the global digital currency market. The launch of the wholesale CBDC is a pivotal moment in the country's journey towards technological advancement, financial empowerment, and pioneering a new era of digital currency innovation.
As the Philippines prepares to embark on this transformative journey, the world eagerly awaits the unveiling of the wholesale CBDC, which is set to mark a new chapter in the country's digital currency strategy. This bold move underscores the Philippines' commitment to harnessing the potential of digital currency and signifies its determination to play a pivotal role in shaping the future of financial technology.
(DAVID ATTLEE, COINTELEGRAPH, 2024)
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