Philippines to Launch Non-blockchain CBDC
14 Feb, 2024 ● Crypto News
The Governor of the Bangko Sentral ng Pilipinas (BSP), Eli Remolona, has disclosed the central bank's plan to introduce a wholesale central bank digital currency (CBDC) within the next few years.
In an interview with local newspaper Inquirer.net on February 12, Remolona elaborated on the BSP's strategy for developing a CBDC.
Contrary to other central banks, the BSP has decided against employing blockchain technology for this project, as Remolona stated:
"Other central banks have experimented with blockchain technology, but the outcomes were not favorable."
Instead, the CBDC will operate on a payment and settlement system owned by the central bank. The BSP will concentrate on a wholesale CBDC, which will be facilitated by banks.
The central bank harbors concerns regarding potential issues associated with retail CBDC, such as disintermediation, bank runs during financial turmoil, and an increased central bank presence. Remolona clarified:
"Our decision is to confine it to wholesale transactions—banks will serve as the sole counterparties, and then, retail transactions will be facilitated through them."
Remolona highlighted the efforts of Sweden and China in developing CBDCs as digital complements to physical cash and "competing cryptocurrencies."
He believes that the Philippines can emulate their progress.
According to Remolona, the CBDC is a definite possibility during his tenure as governor, confirming in response to inquiries from journalists that it could materialize within the next two years.
The Philippines maintains a strict stance on the cryptocurrency industry, safeguarding the local market against foreign entities.
In December 2023, the Philippines Securities and Exchange Commission (SEC) reaffirmed its ban on Binance due to the exchange's unregistered operations in the country.
Despite repeated warnings, Binance has reportedly remained a major cryptocurrency trading platform in the Philippines, with some users praising its local services as "trustworthy and reliable" on social media platforms.
In response to public criticism and arguments regarding Binance's cost appeal to local investors, SEC Chair Kelvin Lee underscored the compliance costs avoided by Binance and advised investors to opt for one of the 17 registered virtual asset service providers.
Sources:
https://cointelegraph.com/news/philippines-introduce-non-blockchain-cbdc-two-years
https://business.inquirer.net/445000/remolona-ph-to-have-digital-currency-in-2-years
