Philippines Central Bank’s Wholesale CBDC Approach
The Governor of Bangko Sentral ng Pilipinas (BSP), Eli Remolona Jr., announced plans to introduce a wholesale central bank digital currency (CBDC) within the next few years. In a statement to the Inquirer on Feb. 12, Remolona disclosed that the CBDC project would not utilize blockchain technology.
Wholesale CBDC: Banking Mediation
Citing challenges faced by other central banks in implementing blockchain-based solutions, Remolona emphasized that the BSP’s CBDC would operate through the Payment and Settlement System owned by the central bank. The focus will be on wholesale CBDC, with banks serving as intermediaries.
Skepticism Surrounding Retail CBDC
Expressing concerns over potential issues such as disintermediation and bank runs during financial stress, Remolona stated that the BSP has opted to limit its CBDC to wholesale transactions. He highlighted the importance of maintaining a central bank footprint while avoiding disruptions to the banking system.
Learning from International Examples
Remolona drew parallels with countries like Sweden and China, where CBDCs serve as digital complements to cash and traditional banking systems. He expressed confidence in the Philippines’ ability to replicate their success.
Timeline for CBDC Implementation
The BSP Governor affirmed that the CBDC initiative would materialize within his term, indicating a possible launch within the next two years. This strategic move aligns with the BSP’s commitment to modernize the country’s financial infrastructure.
Regulatory Stance on Crypto Industry
The Philippines has taken a firm stance on regulating the cryptocurrency industry, particularly in safeguarding the local market from unauthorized foreign players. Recent actions by the Philippines Securities and Exchange Commission (SEC) underscore the government’s commitment to enforcing regulatory compliance.
Addressing Concerns Over Binance
Despite warnings from regulatory authorities, Binance has maintained a significant presence in the Philippines’ crypto trading landscape. SEC chair Kelvin Lee highlighted compliance issues and urged investors to patronize registered virtual asset service providers to ensure regulatory adherence and investor protection.