Philippines to Develop Blockchainless Wholesale CBDC in Two Years

The Central Bank of the Philippines will develop a central bank digital currency (CBDC) in the next two years, according to Governor Eli Remolona Jr. The still unnamed CBDC will focus on the wholesale market and won’t use blockchain tech, instead relying on the Philippine Payment and Settlement System, owned and operated by the central bank.

Philippines to Develop Wholesale CBDC

The Philippines will develop a central bank digital currency (CBDC) in the next two years, according to the governor of the central bank of the country, Eli Remolona Jr. He also clarified that this CBDC would not be based on blockchain tech, focusing on serving the wholesale market, including banks and financial institutions.

The wholesale character of the CBDC would help banks to keep their place as intermediates in the current system, and retail users would “ride on them,” Remolona Jr stated. Choosing a wholesale solution instead of a retail one has to do with the risks that the latter could pose for the Philippine economy, risking disintermediation, accelerating bank runs, and increasing the power of the central bank.

Remolona Jr explained:

There are others that have done it, which we can replicate. It’s what the central banks will use to rival cryptocurrencies.

Also, Remolona Jr specified that the CBDC would leverage the Philippine Payment and Settlement System, a settlement processor owned and operated by the central bank, ditching blockchain. “Other central banks have tried blockchain but it didn’t go well,” he stressed.

Remolona Jr detailed that the country could learn from other implementations of this kind of currency, mentioning the e-krona, Sweden’s CBDC, and the Chinese digital yuan, stating it was almost completed.

While the generalized use of a CBDC has still not happened at a national level, 93% of central banks are engaged in CBDC work, according to a survey completed by the Bank for International Settlements (BIS). Furthermore, a study by the Official Monetary and Financial Institutions Forum (OMFIF) found that 41% of the consulted central banks expect to have an operational CBDC by 2028.

What do you think about the development of a centralized wholesale CBDC in the Philippines? Tell us in the comments section below.