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The project will provide a chance for the entire finance industry to comprehend the prospects and risks associated with wholesale CBDCs.
The Bangko Sentral ng Pilipinas (BSP) has announced its decision to pursue a wholesale CBDC project. The BSP Governor, Benjamin E. Djokno made this announcement at the 14th Annual Group of 24/Alliance for Financial Inclusion Policymakers’ Roundtable. Dubbed CBDCPh, the project aims to improve the stability of the nation’s payment system.
Wholesale CBDC Project More Valuable than Retail CBDC
The Philippines Central Bank believes launching a retail CBDC project will not add much value to the existing payment system in the country. This conclusion follows from the progress the country has made in implementing its retail payment and financial inclusion reforms. A presentation prepared before the roundtable meeting noted that at the end of 2020, 20.1% of the monthly retail payment was now in digital form. Compared to 10% in 2018 and 1% in 2013, this is a significant improvement in digital usage.
Consequently, the bank perceives that the use of the wholesale CBDC has more to offer in the Philippines than the retail CBDC. Through its pilot, the bank will test the use of CBDCs by commercial banks and financial institutions for large-scale financial transactions like cross-border payments, equity securities payments and intraday liquidity facility (ILF). The test run will begin with a limited number of financial institutions.
Benefits of Project Beyond BSP
Governor Benjamin E. Diokno noted that the benefits of the project far outweighed what the BSP alone would enjoy. He stated that it provided a chance for the entire finance industry to comprehend the prospects and risks associated with wholesale CBDCs.
“Learnings from the pilot will be critical in constructing the BSP’s medium- to long-term roadmap for more advanced wholesale CBDC projects that shall further strengthen the Philippine payment system,” the Governor stated.
The Philippines took the first step towards a CBDC last year by launching an exploratory study of CBDCs. Now, it has formed an intersectoral project management team to lead the Project CBDCPH. Diokno noted the CBDCPh project team would also involve external advisers who will bring their knowledge and experience about CBDCs from international standard-setting bodies and multilateral institutions