The Bangko Sentral ng Pilipinas (BSP) announced on Wednesday its plan to launch a pilot project involving a central bank digital currency (CBDC).
Officially called Project CBDCPH, the pilot project is meant to explore the viability of CBDC in large-value financial transactions.
A CBDC is a digital token similar to cryptocurrencies, but instead of having a decentralized system, the former is issued and regulated by a central bank. The value of a CBDC is tied to the country’s fiat currency.
Select financial institutions will participate in the project on a 24/7 basis, according to BSP Governor Benjamin E. Diokno. Both banks and non-bank institutions might possibly be covered.
A project management team with members from various sectors and external advisers from international bodies will lead the pilot project. They will ensure the project takes into account various areas of focus, including risk management, legal matters, technological infrastructure, and regulatory considerations.
Diokno said CBDCs may address pain points in large cross-border transactions and foreign currency transfers through transaction cost reduction, shortened processing times, and better transactions transparency.
Diokno further said that the project would only focus on wholesale CDBC for banks and other financial institutions, believing there is little value in the use of retail or general purpose CBDC in the Philippines.