MANILA, Philippines — The Bangko Sentral ng Pilipinas is on track to issue its wholesale central bank digital currency (CBDC) by 2029, or within the six-year term of BSP Governor Eli Remolona Jr.
In a press briefing, BSP Deputy Governor Mamerto Tangonan said that Project Agila, the wholesale CBDC project of the central bank, is nearing the end of its proof-of-concept phase.
“The governor is very early in his term and we’re already about to conclude proof of concept. This is an innovative payment instrument. In fact there’s no central bank in the world that has already launched wholesale CBDC, with the exception of the Swiss National Bank,” he said.
Project Agila is a two-phase run that started in December 2022. It aims to better understand CBDC technology and assess the capability of wholesale CBDC to foster advancements in the large-value payment system.
The BSP completed the first phase of the pilot by picking Hyperledger Fabric as the distributed ledger technology in July last year.
Bridget Rose Mesina-Romero, director of the BSP’s Payments Policy and Development Department, said they will issue a report containing all their findings and assessment related to the sandbox test experiments on Project Agila by the end of the project, which is toward the end of the year.
“Currently we are conducting two test runs of our sandbox experiments from May to June. In a matter of seven weeks, we were able to complete the first step of the test run and we have tested the distributed ledger technology as well as the tokenization of wholesale CBDC,” she said.
The BSP will also assess the programmability feature of CBDC technology, which is expected to enhance and automate the processes of payment systems.
“We will be able to make it more efficient and streamline the number of institutions that are intermediating right now and the back-office arrangements of our payment systems,” she said.
However, Tangonan said banks and the BSP should understand how to utilize CBDCs, how to effectively manage them and how to ensure their safe operation.
“If the proof-of-concept (phase) brings the literacy and the knowledge of both the BSP and banks to a level that they are ready to launch it, then only at such time will we make a decision whether to go or not go,” he said.
“This an entirely new thing and we have to make sure that we can offer it, maintain it and operate it safely, and that the banks can do likewise and that they have a business use case for it.”
CBDCs are a form of digital money denominated in the national unit of account and are direct liabilities of the central bank. Wholesale CBDCs may be issued to commercial banks and other financial institutions to settle interbank payments, securities transactions, and cross-border payments, among others.
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