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The Bangko Sentral ng Pilipinas (BSP) will continue to study and strengthen capacity building on the central bank digital currency (CBDC), but it is unlikely to issue them in the short or medium term, according to BSP Governor Benjamin E. Diokno .
“The end of my term is 2023. I don’t think so. Most central banks said they will not issue a CBDC in the next five years, so not within my mandate, “Diokno said in an online briefing on Thursday.
Despite this, Mr. Diokno said that the BSP is interested in exploring CBDCs.
“We will continue our investigation. This could be done in the current payment system, including possible areas for improvement; privately issued digital currencies in the Philippines, covering its business models and regulatory development using industry sandboxes; and CBDC developments among central banks, ”he said.
Diokno said they will also take advantage of possible technical assistance from institutions such as the International Monetary Fund or the Bank for International Settlements and seek to consult with other central banks to boost the BSP’s awareness of CBDCs.
CBDCs differ from cryptocurrencies in that the latter are prone to price volatility, Diokno said.
“In contrast, a CBDC is a digital form of central bank money that is denominated in a national unit of account and functions as a medium of exchange and a store of value,” he said. “Given these characteristics of CBDC, it is expected to be preferable to privately issued digital currencies.”
According to the exploratory evaluation of the BSP, the benefits of CBDCs include the facilitation of financial inclusion and a possible decrease in the use of cash, an additional option for monetary policy tools, as well as the promotion of competition and innovation in the payment system.
“Some central banks are also participating in CBDC activities as part of contingency planning. This encourages preparedness in the event that the payment environment requires the adoption of a CBDC, ”Diokno said.
On the other hand, risks that can arise from CBDCs include a loss of privacy for consumers, higher costs in the banking system due to possible competition between bank deposits and CBDCs, and threats of money laundering, terrorist financing. , as well as cybersecurity problems.
So far, some countries that participated in some forms of CBDC activities and pilots include China, the Marshall Islands, Sweden, the Bahamas, and the Eastern Caribbean. – LWTN
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