Date: 16 February, 2024
Key Points:
- The Philippines plans to launch wholesale CBDCs within two years, prioritizing safety over retail CBDCs.
- BSP Governor Eli Remolona Jr. emphasizes the lack of use of blockchain, relying on banks as primary counterparts.
- The decision aims to enhance safety and efficiency in domestic and cross-border transactions.
- Wholesale CBDCs eliminate intermediaries, offering reduced settlement times and streamlined processes.
- The Philippines follows Singapore’s lead, with Singapore set to launch its wholesale CBDC early this year.
- Ravi Menon, Managing Director of the Monetary Authority of Singapore, announces collaboration for wholesale CBDC pilot during the Singapore Fintech Festival.
Wholesale CBDCs
In a strategic move, the Philippines plans to roll out a wholesale Central Bank Digital Currency (CBDC) within the next two years. Despite an initial exploration of retail CBDCs, the Bangko Sentral ng Pilipinas (BSP) has opted for a wholesale approach, citing concerns about the readiness of local financial institutions to manage the risks associated with CBDCs.
BSP Governor Eli Remolona Jr. highlighted that, unlike some central banks’ attempts with blockchain, the Philippines would not utilize distributed ledger and blockchain technology for its wholesale CBDC. He emphasized that this approach would involve banks as the primary counterparties, with retail transactions relying on them.
The decision to focus on wholesale CBDCs stems from the belief that they can enhance the safety and efficiency of both domestic and cross-border transactions. By providing an additional channel for banks to deposit funds with the BSP outside of reserves, the system aims to facilitate real-time interbank payments.
Wholesale CBDCs, by eliminating intermediaries, offer advantages such as reduced settlement times and streamlined transaction processes. The Philippines joins Singapore in recognizing the potential benefits of wholesale CBDCs, with Singapore set to launch its own version early this year. Ravi Menon, Managing Director of the Monetary Authority of Singapore, announced a collaboration with local banks to pilot wholesale CBDCs during the Singapore Fintech Festival in November. Singapore had previously experimented with distributed ledgers in 2016, focusing on real-time cross-border payments and settlements with central banks through their inaugural pilot project, Project Ubin.
References:
Read more about CBDCs at rue-dex.com