The Bangko Sentral bg Pilipinas (BSP) is on track to unveil its own digital currency within the next two years, aiming to present a secure and regulated alternative to the volatile world of cryptocurrencies. This pioneering move seeks to leverage the Peso Real Time Gross Settlement System under the existing National Payment Systems Act, steering clear of blockchain technology.
BSP’s leader, Eli Remolona Jr., positions the Central Bank Digital Currency (CBDC) as a strategic counter to the proliferation of private digital currencies, drawing inspiration from China’s effective trials with its digital yuan (e-CNY).
Aiming to complement rather than substitute physical money, the Philippines’ CBDC will first be made available to commercial banks. This wholesale digital currency is designed to enhance the efficiency, security, and resilience of payment systems both domestically and internationally.
Despite the global intrigue with blockchain, Remolona points out the BSP’s decision to opt for a more traditional infrastructure, emphasizing the success of non-blockchain approaches like that of Sveriges Riksbank in Sweden, which also aims to augment cash rather than replace it.
The introduction of CBDCs marks a pivotal response to the challenges posed by private digital currencies. By referencing China’s successful e-CNY project, Remolona underscores the potential of CBDCs to navigate the complexities of digital finance effectively. This move is part of a broader trend, with countries like India imposing a 30% tax on private crypto transactions and exploring regulated digital currencies to curb the unregulated crypto market.
The narrative of CBDCs as a tool for regulating the digital currency landscape is further evidenced by various international efforts. From the United States’ regulatory scrutiny amidst the banking crisis to Hong Kong’s stringent crypto regulations and Singapore’s promotion of tokenized payment systems, the global shift towards CBDCs reflects a concerted effort to offer a regulated, stable alternative to traditional cryptocurrencies, ensuring a balanced approach to innovation and financial security.
