Rony Roy
The Philippine Central Bank has completed testing the proof of concept for its wholesale central bank digital currency (CBDC), which is expected to facilitate 24/7 fund transfers.
On December 5, the Bangko Sentral ng Pilipinas (BSP), the Philippines’s central bank, announced the conclusion of the trial phase of its CBDC initiative code-named Project Agila.
Under the initiative, the central bank worked alongside participating financial institutions to assess the system’s performance, functionality, programmability, and security.
The wholesale CBDC is designed to facilitate secure, round-the-clock fund transfers, including weekends and holidays, among financial institutions. It has been developed using distributed ledger technology hosted on Oracle Cloud Infrastructure.
Wholesale CBDCs are issued by central banks and serve financial institutions for high-value transactions such as interbank payments, securities settlements, and cross-border operations.
Unlike retail CBDCs, which are aimed at the general public, wholesale CBDCs cater exclusively to institutional use cases.
According to BSP Governor Eli M. Remolona, Jr., wholesale CBDCs could “enhance liquidity management, reduce settlement risks, and support financial stability” in a bit to modernise the nation’s economy.
The central bank plans to use insights from Project Agila to develop a long-term CBDC roadmap aimed at modernizing the country’s financial infrastructure.
Launched in March 2022, Project Agila aims to assess how CBDC technology can improve the efficiency and resilience of the Philippines’ large-value payment systems.
While the BSP has not committed to issuing a CBDC, the project underscores its strategy to adopt emerging technologies for financial modernization.
The central bank has set a tentative timeline to introduce a wholesale CBDC by 2029, aligning with Governor Remolona’s tenure, as communicated in a July press briefing.
BSP Deputy Governor Mamerto Tangonan noted at the time that the decision to launch a wholesale CBDC would depend heavily on the readiness of both the central bank and financial institutions.
He explained that such a launch would only occur once the BSP is confident in its ability to “offer, maintain, and operate it safely” and when banks have developed viable business use cases for the digital currency.
Tangonan emphasised the importance of ensuring operational security and understanding the practical implications of implementing a BSP-issued digital currency, noting this is “entirely new” and requires both the central bank and institutions to achieve a high level of literacy and preparedness.
CBDCs are gaining momentum
CBDCs have become a focal point for central banks globally as they explore digital currency solutions to modernize financial systems.
India, similar to the Philippines, has adopted a cautious approach with its digital rupee pilot launched in 2022 as a bank-to-bank solution.
The Reserve Bank of India is currently evaluating the security implications and potential impact on monetary policy transmission.
RBI Deputy Governor T. Rabi Sankar has stated that the rollout to retail users will only proceed after thorough assessments, with no fixed timeline established.
Brazil is also advancing its CBDC initiative, Drex, after entering the second phase of its pilot program.
Major companies, including Microsoft, Chainlink, Banco Inter, and 7Comm, are collaborating on the project to refine its operational framework.
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