The Governor of Bangko Sentral ng Pilipinas (BSP), Eli Remolona, has unveiled the central bank’s strategy to introduce a wholesale central bank digital currency (CBDC) in the coming years.
Remolona clarified to local newspaper Inquirer.net on Feb. 12 that the BSP’s CBDC initiative would not utilize blockchain technology. He cited previous experiences of other central banks with blockchain, noting that it didn’t yield favorable outcomes.
Instead, the BSP aims to develop a wholesale CBDC operating on a payment and settlement system owned by the central bank. This model will involve banks as intermediaries, focusing primarily on wholesale transactions.
Remolona expressed concerns about potential issues associated with retail CBDCs, such as disintermediation and heightened central bank influence. To mitigate these risks, the BSP will restrict its CBDC to wholesale transactions, with banks serving as primary counterparties.
Citing the examples of Sweden and China, Remolona sees CBDCs as a digital counterpart to cash and a response to the rise of “rival cryptocurrencies.” He believes the Philippines can emulate their experiences in CBDC development.
Remolona asserted that the CBDC would be implemented within his term as governor, with the possibility of it happening within the next two years.
The Philippines has taken a firm stance on regulating the cryptocurrency industry to protect its local market. In December 2023, the Philippines Securities and Exchange Commission (SEC) reiterated its ban on Binance due to the exchange’s unregistered activities in the country.
Despite warnings from regulatory authorities, Binance remains a prominent cryptocurrency trading platform in the Philippines. Some users on social media have described its local services as “reliable and stable.”
In response to public criticism and arguments regarding the cost-effectiveness of using Binance for local investors, SEC Chair Kelvin Lee highlighted compliance costs evaded by Binance and advised investors to utilize one of the 17 registered virtual asset service providers.
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