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The Central Bank of the Philippines is not ready for a CBDC

October 22, 2020

The Governor of the Central Bank of the Philippines, Benjamin Diokno announced that the institute’s “exploratory” study of a digital currency, published by the central bank, suggests that much more work is needed to make a digital peso a reality.

Over the summer, Bangko Sentral ng Pilipinas confirmed that it was investigating the feasibility and possible policy implications of issuing its own CBDC or a digital equivalent to the physical peso.

At a press conference Diokno would have declined the possibility that a CBDC could be issued at any time in the near future. The previous study has shown that ongoing research is needed to examine capacity building and interconnection between other central banks and financial institutions.

The Central Bank of the Philippines is not ready for a CBDC
The Central Bank of the Philippines is not ready for a CBDC

Until now, The bank’s study looked at fundamental issues related to CBDCs, focusing on the implications for monetary policy, the legal framework, payment and settlement systems, financial inclusion and oversight of regulators.

The governor said CBDC research on GNP could benefit from an examination of the private sector digital currency business models in the Philippines, as well as the use of industrial sandboxes. The central bank plans to study how to improve the country’s existing payment system and leverage the CBDC research of other central banks around the world.

The CBDC investigation in the Philippines was conducted as part of the central bank’s digital payments transformation roadmap The aim is to switch more than 50% of retail payments to digital form by 2023and make sure that 70% of citizens have a bank account at the end of the period.

The ongoing investigation of the CBDC, in the opinion of the BSP, may require technical input from the International Monetary Fund and the Bank for International Settlements.

The central bank remains committed to the belief that CBDCs are superior to private digital currencies and has indicated that their digital innovations will continue to evolve within the existing structure of fiat currencies.