THE BANGKO SENTRAL ng Pilipinas (BSP) is still not keen on issuing its own central bank digital currency (CBDC) but is open to expanding its knowledge on the subject as the use of virtual assets continues to grow.
“Whether we issue CBDC [or not], the bigger issue maybe is whether we should. We’re not going to issue central bank digital currency just because Singapore [and other countries]…are doing it. We will want to issue CBDC because there are specific problems that we want to solve,” BSP Director for Technology Risk and Innovation Supervision Department Melchor T. Plabasan said in an online forum organized by the European Chamber of Commerce of the Philippines.
Mr. Plabasan said they will look at the net benefits of a possible issuance for consumers, the financial system, and the economy as a whole.
BSP Governor Benjamin E. Diokno has said they are unlikely to issue CBDCs within the next five years at least. His term ends by mid-2023.
Mr. Plabasan added that there are hurdles to issuing CBDCs that need to be discussed.
“There are important technical, legal and security issues that need to be fully understood particularly when it comes to the implication on monetary stability, financial intermediation and financial input,” he said.
A CBDC is centralized, issued, and regulated by a central bank that can act as both a medium of exchange or store of value, making it distinct and less prone to price volatility compared with decentralized cryptocurrency projects like Bitcoin.
CBDCs may also act as a representation of actual paper-based currency notes. Central banks in China, Sweden, and Singapore are among the regulators that are looking into the possibility of issuing CBDCs.
Mr. Plabasan earlier said local virtual currency exchanges processed transactions worth P76 billion as of end-September 2020, surging more than five times the P14.9 billion in the same period of 2019.
In the same forum, Jose Jesus M. Disini, Jr. a managing expert at the Disini Law and an information and technology law professor at the University of the Philippines College of Law, noted how the central bank’s perception of cryptocurrencies has evolved.
“In 2014, the BSP regulation can be summarized in this way: be afraid, be very afraid of Bitcoin. And since then, they have moved from then to a very accommodative stance where now we’re seeing a huge adoption in the Philippines,” Mr. Disini said.
“I think this [BSP’s more welcoming stance] shows the BSP’s forward-looking stance not only for OFW (overseas Filipino workers) remittances or for financial inclusion of cryptocurrency but there’s also a broader issue of human development — that if cryptocurrency companies develop and flourish in the Philippines, that can be a talent pool that we can leverage,” he added. — LWTN