New forms of money are challenging the traditional monetary infrastructures that have existed for so long as the finance industry is changing. The central bank digital currencies (CBDCs), which are currently being used by many countries, have attracted the attention of the Philippines.
In a joint event, Bangko Sentral ng Pilipinas, the Philippines’ central bank, and the Alliance for Financial Inclusion, Benjamin Diokno, the BSP Governor, announced the launch of Project CBDCPh. This pilot implementation of a CBDC for Philippines was made public at the event. Diokno stated that the project is designed to increase “the payment system’s safety, resilience, and efficiency.”
“The project’s goal is to increase organizational capacity and practical knowledge of key CBDC aspects that are relevant for a case about addressing frictions within the national payment system.”
Diokno also spoke out about the potential benefits of CBDCs. A CBDC could be used to aid in government-run cash assistance programs, the governor of BSP said. He emphasized that the pandemic demonstrated the value of account-based financial aid distribution. Diokno believes this can be used “to provide immediate support to the most fragile segments of society.”
Bangko Sentral ng Pilipinas Governor Benjamin Diokno. Source: Philstar
The governor highlighted the potential benefits of the project, but also the potential problems that it may face such as a lack of technological infrastructure. Diokno stated that regulators and the financial authorities will need to develop the necessary skills and technology to successfully implement and manage the CBDC issuance risks.
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Lael Brainard of the Federal Reserve Board of Governors in the United States urged the U.S. leadership in research and policy regarding CBDCs. Brainard cites developments in China and suggests that CBDC developments could impact the U.S. dollar’s cross-border payments dominance.