Philippines announces non-blockchain CBDC plans

Bangko Sentral ng Pilipinas (BSP) has revealed the intention to launch a wholesale central bank digital currency (CBDC) by 2026

Bangko Sentral ng Pilipinas (BSP) has revealed the intention to launch a wholesale central bank digital currency (CBDC) by 2026. Bangko Sentral ng Pilipinas (BSP) has announced it will focus on a wholesale CBDC, which will be mediated by banks.

Its officials explained that the central bank will not use blockchain technology in this project. Instead, the CBDC will operate on a payment and settlement system owned by the central bank. Addressing concerns and tapping wholesale solutions BSP is skeptical about potential problems with the retail CBDC, including disintermediation, bank runs during financial stress, and the further magnifying of the central bank’s footprint.

Therefore, the decision has been made to limit it to wholesale — banks will be the only counterparties and then, retail will ride on them. Officials from the central bank cited Sweden and China as examples, where CBDCs are being developed to serve as digital counterparts to physical cash and 'competing cryptocurrencies.' They are optimistic that the Philippines can emulate their experiences. The Philippines’ digital asset landscape The Philippines takes a hard stance on the crypto industry, defending the local market from foreign players.

In December 2023, the Philippines Securities and Exchange Commission (SEC) reiterated its ban on Binance due to the exchange’s unregistered activity in the country. Despite multiple warnings, Binance has apparently remained one of the major crypto trading platforms in the Philippines. More countries eye wholesale CBDC adoption In January 2024, the Bank of Spain has started collaborating with the Cecabank-Abanca Consortium to conduct experiments using digital tokens for wholesale operations settlement.

The agreement outlines joint efforts aligned with the Banco de España's programme, focusing on achieving the central bank's experimentation goals. This collaboration aims to advance financial transaction development, with the Bank of Spain leading the programme to explore digital token potential in enhancing large-scale financial settlement efficiency and security. The published agreement highlights a two-dimensional approach to planned experiments, assessing the feasibility and implications of introducing wholesale CBDC for financial asset liquidation.

India explores offline CBDC solutions In February 2024, the Reserve Bank of India (RBI) has announced its intentions to explore offline solutions for digital rupee adoption in remote areas with limited internet access. Various methods are being assessed for feasibility, aiming to address connectivity challenges. The bank’s current CBDC system enables P2P and P2M transactions via digital rupee wallets provided by pilot banks.

Testing aims to assess cross-border transaction potential and integration with legacy systems. While existing platforms like UPI offer offline features, the RBI's retail CBDC pilot reached significant transaction volumes by December 2023. Motivations for CBDC initiatives include financial stability and cross-border payment efficiency, with an emphasis on enhancing financial inclusion in developing nations.


Feb 13, 2024 07:37
Original link