Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona has unveiled the central bank's intention to roll out a wholesale central bank digital currency (CBDC) in the coming years. Speaking to the local newspaper Inquirer.net on February 12, Remolona provided insights into the central bank's strategy for CBDC development. Contrary to some central banks, BSP has opted not to leverage blockchain technology for the project, citing mixed outcomes from previous attempts: "Other central banks have tried blockchain, but it hasn’t gone well."
Instead of blockchain, BSP's CBDC will operate on payment and settlement systems directly managed by central banks. The focus will primarily be on wholesale CBDC, wherein banks will serve as intermediaries. Remolona emphasized that BSP's cautious approach stems from concerns surrounding potential issues with retail CBDCs, such as disintermediation and bank runs, which could exacerbate financial instability.
Highlighting Sweden and China as examples, Remolona pointed out that these countries are developing CBDCs to complement physical cash and compete with existing cryptocurrencies. He expressed confidence in the Philippines' ability to follow suit and replicate similar experiences. Remolona affirmed that a CBDC rollout is imminent during his tenure as governor, indicating that it could materialize within the next two years.
The Philippines has maintained stringent regulations on the cryptocurrency industry, particularly in safeguarding the local market against unauthorized foreign entities. In December 2023, the Philippine Securities and Exchange Commission (SEC) reiterated its ban on Binance for operating without proper registration. Despite regulatory warnings, Binance remains a prominent cryptocurrency exchange in the Philippines, with some users praising its reliability and stability.
Responding to public discourse on Binance's appeal to local investors, SEC Chairman Kelvin Lee highlighted factors allowing Binance to evade compliance costs. Lee advised investors to opt for one of the 17 registered virtual asset service providers, signaling BSP's commitment to promoting a compliant and secure crypto ecosystem in the Philippines.
