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DIGITAL CURRENCY. BSP Governor Benjamin Diokno discusses the central bank’s digital currency, among others, during a virtual press conference on Thursday (October 22, 2020). He said that a digital currency issued by BSP will not materialize within its term, or until 2023, but said monetary authorities continue to study its advantages and disadvantages.
MANILA – A central bank digital currency (CBDC) will not materialize in the Philippines within the mandate of the Governor of Bangko Sentral ng Pilipinas (BSP), Benjamin Diokno, which is until 2023.
“I don’t think so. Most central banks said they won’t issue CBDCs in the next five years. So not within my mandate,” Diokno said at a virtual press conference Thursday.
Diokno said that the BSP recently completed its exploratory study on CBDC, which looked at basic concepts and fundamental issues, possible implications and potential risks on monetary policy; financial supervision, payments and settlements; financial inclusion, legislation and regulations; and experiences of other central banks.
Central banks around the world are now studying this instrument due in part to the digitization of payments, with some pilots testing their own version of the currency.
Diokno said that the CBDC reduces the need for physical cash, promotes financial inclusion, broadens the range of options for monetary policy and encourages innovation in the payments system.
He said that the first CBDC benefit is not needed in the Philippines yet, as Filipinos still prefer to pay in cash, but added that this will eventually be experienced once digital financial transactions increase as part of the BSP goal.
Meanwhile, Diokno said the risks of using CBDC include potential financial disintermediation.
“Despite these developments, very few central banks plan to issue CBDCs in the next five years,” he said, citing the results of surveys by the Banks for International Settlements (BIS), among others.
Diokno said that some central banks are now involved in CBDC activities to prepare for its eventual implementation if the need arises.
On the BSP’s side, Diokno said that they continue to study all aspects of this coin and will continue capacity building efforts, including partnering with the International Monetary Fund or the BIS.
“We will continue with the networking. BSP can check with peer central banks for updates on their CBDC-related research, ”he added. (PNA)
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