BSP to explore use of digital currency

The Bangko Sentral ng Pilipinas (BSP) is looking at a long-term and “more advanced” use of central bank digital currency (CBDC) as it pushed ahead with a pilot project involving an experiment on the use of this virtual asset to transfer large-value financial transactions on a round-the-clock basis.

At the seasonal spring meetings of the International Monetary Bank and World Bank, recently held in Washington DC, BSP Governor Benjamin Diokno touted this pilot run as part of efforts to bolster and ensure stability of payment systems in the Philippines.

Dubbed Project CBDCPh, the pilot project will run across a limited number of financial institutions but possibly covering both banks and nonbank institutions.

Through this initiative, an intersectoral project management team in the BSP will look at policy and regulatory considerations, technological infrastructure, governance and organizational requirements, legal matters, payment and settlement models, reconciliation procedures and risk management.

Diokno said the CBDCPh project team also includes external advisers from international standard-setting bodies and multilateral institutions to build on training and knowledge sharing on CBDC development and implementation all over the world.

“The learnings from the pilot are critical in constructing the BSP’s medium to long-term road map for more advanced wholesale CBDC projects that shall further strengthen the Philippine payment system,” the BSP chief said.

Similar to cryptocurrency, CBDCs are digital token issued by a central bank and is tied to the value of—in the BSP’s case—the Philippine peso.