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  • Writer's pictureTeresa Pace

Within the next two years, the Philippines is considering the possibility of unveiling a Central Bank Digital Currency (CBDC) that does not rely on blockchain technology.

The central bank of the country is set to prioritize the development of a wholesale Central Bank Digital Currency (CBDC), which will be facilitated through banks. Governor Eli Remolona of the Bangko Sentral ng Pilipinas (BSP) has disclosed the central bank's plans to introduce this wholesale CBDC within the coming years.

In an interview with local news outlet on February 12, Remolona outlined the BSP's strategy for implementing a CBDC. Contrary to some other central banks, the BSP has decided not to utilize blockchain technology for this project, citing previous challenges faced by other central banks in this regard.

Instead, the CBDC will operate on a payment and settlement system directly managed by the central bank. The BSP's focus will be on a wholesale CBDC, with banks acting as intermediaries.

Remolona expressed concerns regarding potential issues associated with a retail CBDC, such as disintermediation, bank runs during financial crises, and an increased central bank presence. As such, the decision has been made to restrict the CBDC to wholesale usage, with banks serving as the sole counterparties.

Drawing inspiration from the experiences of countries like Sweden and China, which are developing CBDCs alongside cash and other cryptocurrencies, Remolona believes that the Philippines can follow suit.

Remolona is confident that the CBDC will be implemented during his tenure as governor, with expectations suggesting it could occur within the next two years.

The Philippines has taken a firm stance on the cryptocurrency industry, particularly in safeguarding the local market from foreign entities. In December 2023, the Philippines Securities and Exchange Commission (SEC) reiterated its ban on Binance due to the exchange's unregistered activities within the country.

Despite the warnings issued by the SEC, Binance remains a significant cryptocurrency trading platform in the Philippines, with some users praising its reliability and stability on social media.

In response to public criticism and debates surrounding Binance's cost-effectiveness for local investors, SEC Chair Kelvin Lee highlighted the compliance costs evaded by Binance and advised investors to utilize one of the 17 registered virtual asset service providers.

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