Philippines Central Bank to Launch Digital Currency Pilot Program

The central bank of the Philippines (Bangko Sentral ng Pilipinas (BSP)) will launch a pilot program for a Central Bank Digital Currency (CBDC). The program, named Project CBDCPh, aims to bring hands-on knowledge of the key aspects of CBDC’s nature and its implication for the country’s financial system.

According to a report released by the ASEAN+3 Macroeconomic Research Office (AMRO), some 40 countries are undertaking research on CBDCs and three central banks have launched CBDCs for commercial use. 14 countries have launched a piloted testing scheme for CBDCs while a further 16 countries are in the proof-of-concept stage of CBDC development. Another 40 countries are in the research stage, such as the Philippines.

One of the main potentials for the issuance of a CBDC in the Philippines is its potential to increase financial inclusion amongst the population. The country is still largely a cash-based economy with most businesses accepting cash as the only form of payment, which is considered costly, risky, and facilitates the black economy.

The Philippines is home to a large unbanked and underbanked population with some 66 percent of this total population having no access to traditional banking services or similar financial organizations. The BSP plans to boost the number of banked populations to 70 percent and 50 percent of payments done online by 2023.

The COVID-19 pandemic sparked the first wave of digital transformation in the country and the Philippines registered the highest number of first-time users of digital payment methods at 37 percent. The regional average was 15 percent. As such, digital payments made up 20 percent of total financial transactions in the country in 2020, an increase from 14 percent in 2019. Also in 2020, e-money transactions totaled 2.39 trillion PHP (US$46.5 million), an increase of 61 percent compared to 2019.

CBDCs can take advantage of mobile technologies to provide increased access to financial services to rural households and other segments that are underserved by the current banking system.

Reference: https://www.aseanbriefing.com/news/philippines-central-bank-to-launch-digital-currency-pilot-program/