The Central Bank of the Philippines Focuses on a Wholesale CBDC Mediated by Banks
Eli Remolona, the Governor of the Bangko Sentral ng Pilipinas (BSP), has announced the central bank’s intention to introduce a Central Bank Digital Currency (CBDC) in the coming years. Speaking to local newspaper Inquirer.net on February 12, Remolona detailed BSP’s plan for developing a CBDC, stating that blockchain technology will not be utilized in this project. According to the central bank’s chief, other central banks have experimented with blockchain but without much success.
Instead, the CBDC will operate on a payment and settlement system owned by the central bank. BSP will focus on a wholesale CBDC that will be mediated by banks. The central bank has expressed concerns about potential issues with a retail CBDC, including the lack of intermediation, bank performance during financial stress, and further magnification of the central bank’s footprint. Remolona explained that the decision is to limit it to wholesale, where banks will be the only counterparties, and then retailers will use it. He referred to examples from Sweden and China, which are developing CBDCs as digital complements to cash and competing digital currencies, believing that the Philippines could replicate their experience.
According to the official, a CBDC will definitely happen during his tenure as governor. Responding to journalists’ questions, he confirmed that it might occur within the next two years. The Philippines takes a stringent stance towards the crypto industry, protecting the local market from foreign players. In December 2023, the Philippine Securities and Exchange Commission (SEC) reiterated the ban on Binance due to the exchange’s unregistered operations in the country. Despite multiple warnings, Binance remains one of the main cryptocurrency trading platforms in the Philippines, with some users describing its local services as reliable and stable on social media.
Kelvin Lee, the head of SEC, responded to public criticisms and arguments about Binance’s cost appeal to domestic investors, pointing to Binance’s compliance costs and advising investors to use one of the 17 registered virtual asset service providers.