The Philippines may have revealed its plans for a central bank-issued digital currency (CBDC). This follows after the Governor of Bangko Sentral ng Pilipinas (BSP) Remolona recently shared a statement to this effect.
Speaking to journalists, Remolona noted that the country will not be issuing a retail version of the digital currency. However, it plans to launch the wholesale version within two years.
Interestingly, it appears that The Philippines might be setting out on its CBDC journey a bit differently from many others. According to a report by the local news outlet, the country has no plans to use the blockchain or digital ledger technology that underpins many virtual assets.
The report quoted Remolona, who said:
“Other central banks have tried blockchain, but it didn’t go well.”
In his explanation, Remolona noted that the BSP plans to allow the CBDC to operate on a payment and settlement system owned by the central bank itself.
Philippines to Float Wholesale CBDC Only
Other than not using blockchain technology for its proposed CBDC project, the BSP will also focus on a wholesale CBDC that will be mediated by banks.
Remolona noted that the country, through the BSP, had carried out a thorough study of CBDCs. This study was what helped the bank to determine that some issues are known to typically affect the retail CBDC.
According to the BSP, a retail CBDC, which may be used by the general public, could worsen the situation in the event of a bank run during a financial crisis. On the other hand, it found that a wholesale version could improve the efficiency and safety of domestic and cross-border payments. So, it may be understandable where the Philippines is coming from with its decision.
More so, the country also appears to have taken a cue from the likes of China and Sweden, both of whom are also currently trying out their CBDCs.
The Philippines would be hoping to tap the experience of these other countries in its bid to provide a digital alternative to cash. But most importantly, it hopes to offer an alternative that will rival cryptocurrencies.
Recall that the Philippines is not exactly friendly with the crypto industry. It continues to defend its local market from foreign players. Last December, the Philippines Securities and Exchange Commission (SEC) saw the need to issue a notice reminding users that Binance remains banned in the region.
Although Remolona did not give a specific date of launch, he remains confident that the CBDC would be launched during his tenure as governor of the BSP.