BSP looks deeper into CBDC viability

THE Bangko Sentral ng Pilipinas (BSP) said it is looking deeper into the viability of a central bank digital currency (CBDC) in the Philippines.

During a virtual briefing late last week, BSP Governor Benjamin Diokno said the Bangko Sentral has already documented the developments and initiatives of other central banks on CBDC in a report released last month.

A CBDC is a digital form of central bank money that is denominated in a national unit of account and functions as both a medium of exchange and a store of value.

The recently released BSP study has recommended continuing research, capacity building and the establishment of networks with central banks and institutions that are also researching on the currency.

While the BSP is not keen on issuing its own digital currency anytime soon, Diokno said it continues to monitor developments in private digital currencies and CBDCs in both the domestic and global markets.

“We are currently preparing to undertake a study of its existing payments and settlement system vis-a-vis its digitalization agenda to assess any gaps that may be addressed by a CBDC, and its value proposition against existing payment system,” he stressed.

“We believe that the ongoing experiments around the region are also motivated by the need to better understand the technology and operational aspect of CBDC, including its challenges,” he added.

Diokno, however, stressed that the Bangko Sentral’s decision to issue its own CBDC shall be aligned with the its Digital Payments Transformation Roadmap, which charts its current initiatives and strategy in advancing an efficient, inclusive, safe and secure digital payments ecosystem.

The roadmap has two key strategic objectives. First is strengthening customer preference for digital payments by converting 50 percent of the total volume of retail payments in digital form and expanding the number of the financially included to 70 percent of Filipino adults by boarding them on the formal financial system through the use of payment or transaction accounts.

The roadmap essentially links the central bank’s digitalization efforts with our broader financial inclusion agenda, according to Diokno.

“Our focus has always been the provision of an enabling policy environment for digitalization with adequate consumer protection safeguards. Going forward, the same principle would apply the CBDC development,” he concluded.