MANILA — Bangko Sentral ng Pilipinas Governor Benjamin Diokno said on Friday that the experiment on the central bank’s wholesale digital currency (CBDC) will begin in the fourth quarter.
CBDC is a digital form of central bank fiat currency.
CBDCs could improve funds transfers between banks and non-bank financial institutions, the central bank said at a forum with the Asian Development Bank Institute.
The experience signals a growing acceptance of blockchain technology in finance that could eventually lead to the launch of a CBDC in the near term, the BSP said.
“We’re going to launch this, the CBDC PH, this, the fourth quarter of this year. It involves a number of financial institutions. So let’s see where we go from there,” Diokno said.
It uses the same blockchain technology used to issue and track cryptocurrencies such as Bitcoin and Ethereum.
The main difference is that unlike these cryptocurrencies, CBDCs are backed by their respective central banks and governments. Cryptocurrencies, on the other hand, are designed to be decentralized without a regulatory authority.
“BSP finds it critical to conduct experiments on wholesale rather than retail CBDCs, which can be used for inter-institutional funds transfers between banks and non-bank financial institutions,” Diokno said.
“The Central Bank could use lessons from a pilot project, which we are launching this year, to determine how a wholesale CBDC can potentially be deployed to address issues related to cross-border payments, securities settlement and liquidity. intraday,” he said. added.
The BSP under Diokno has pushed for digital advancements in line with its goal of converting 50% of payments to digital by 2023.
As of the end of March, the BSP registered 19 Virtual Asset Service Providers or VASPS that allow Filipinos to exchange and trade virtual assets such as cryptocurrencies and non-fungible tokens or NFTs.
Six digital banks have also received licenses to operate and develop financial inclusiveness in the country.
Currently, the retail payment system includes InstaPay and PESONet online funds transfers.
In October 2021, the BSP said that one in five payments was already digital.