BSP looks to complete wCBDC roadmap this year

THE BANGKO SENTRAL ng Pilipinas (BSP) could complete the roadmap for the country’s wholesale central bank digital currency (wCBDC) by October, a senior central bank official said.

BSP Deputy Governor Mamerto E. Tangonan said it will take them three more months to finish and approve the strategic roadmap for the wholesale BSP-issued digital currency.

“Give us three months because we’ll write it and then it goes through our approval process,” Mr. Tangonan told reporters on the sidelines of an event at the BSP Head Office in Manila on Friday.

Asked when they aim to launch the roadmap, Mr. Tangonan said they want to finish the roadmap first before setting a release date.

According to the central bank, the CBDC roadmap will outline the initiatives, stakeholder involvement, timelines, and deliverables for exploring, testing, and developing use cases that address real constraints in the payments system.

The deputy governor said that their assessment from the first phase of Project Agila showed that wholesale CBDCs may be used for interbank fund transfers, securities settlements, and large value cross-border payments.

“Those are the opportunities we saw that make economic sense,” Mr. Tangonan added.

He added that they are evaluating whether the wholesale CBDC can serve as a backup to the country’s Real-Time Gross Settlement (RTGS) Payment System.

“The other thing that we’re looking at — but we’re not… this one we still have to prove — is if we can use it as a backup to the RTGS,” he said. “Because if you’re able to settle obligations amongst each other, that’s what the RTGS does.”

Meanwhile, Mr. Tangonan said they are now preparing for Project Agila 2, under which they seek to make government bonds more accessible to the public by allowing the government, securities, and dealers to settle their purchases of government bonds using wholesale CBDCs.

“And the idea there is we want to see that the government bonds can be accessed by more Filipinos,” he added.

Project Agila is the BSP’s pilot project to explore the potential introduction of wCBDCs in the country and possible use cases.

CBDCs are issued as direct central bank liabilities. Wholesale CBDCs are designed for use by banks and other financial institutions to settle interbank payments, securities transactions, and cross-border payments, among others.

It allows banks to maintain an account with the BSP, where their balances would be credited or debited based on transactions with other banks, which is similar to the RTGS but uses distributed ledger technology and tokenization to allow for greater automation and faster processing.

The BSP said in a report on Project Agila released last week that wCBDCs have the potential to address gaps in the country’s payments space, bring down transaction costs, and reduce settlement risks. These could also be used to allow for round-the-clock settlement between financial institutions, with the potential for interoperability with other payment systems and financial market infrastructures. — K.K. Chan