The Philippines is getting closer to issuing a controlled, centralized digital peso after its central bank announced Project CBDCPh, a pilot program.
The Covid-19 epidemic was a watershed moment for the bank, demonstrating how digital currencies might help government financial aid initiatives.
“We have watched, throughout the epidemic, how account-based distribution of financial assistance has been widely adopted by governments to provide rapid support to the most vulnerable parts of society,” stated Benjamin Diokno, Governor of the Bangko Sentral ng Pilipinas (BSP).
He stated that the creation of a Central Bank Digital Currency (CBDC) “can help the efficient implementation of large-scale targeted government financial assistance programs.”
Governor Diokno remarked that a number of ASEAN countries have already established their own versions of Central Bank Digital Currencies (CBDC). The International Monetary Fund (IMF) and the Asian Development Bank have also expressed interest (ADB).
“These institutions are doing in-depth research and commencing policy debates with the goal of contributing to the growing framework for the adoption of a CBDC as a potential game-changer in the international monetary system,” he added.
Last year, the Central Bank began an investigation into the nature of CBDC and its ramifications for the whole financial system.
“A national payment system study was later done, which led in the discovery of applicable wholesale CBDC use cases aimed at improving the payment system’s safety, resiliency, and efficiency,” Diokno explained.
The introduction of the digital peso may necessitate legislation.
The governor also warned that a CBDC would pose legal concerns and may necessitate legislation, especially if it involved the BSP directly distributing cash to the public, as this is not authorized by the bank’s current charter.
“Additionally, monetary authorities and regulators will need to have the necessary expertise and technology capacity to successfully implement and control the risks associated with CBDC issuance,” Diokno emphasized.
The news was made last week during the BSP-AFI Virtual Knowledge Exchange Program-3, which was co-hosted by the Bangko Sentral ng Pilipinas and the Alliance for Financial Inclusion.
Diokno remarked last month that there are no plans to create a CBDC in the foreseeable future because the people is still strongly reliant on cash.