MANILA - Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Thursday its unlikely for the Central Bank to issue its own digital currency during his term.
The BSP has finished its study on the Central Bank Digital Currency (CBDC), the regulated equivalent of cryptocurrencies such as Bitcoin. Although there won't be an issuance in the next few years, the BSP will continue to its study, Diokno said.
Cryptocurrencies gained popularity in the last few years along with the blockchain technology or a data-based ledger shared in a network of computers.
"The end of my term is 2023. I don’t think so. Most central banks say they will not issue a CBDC within the next 5 years, so not within my term," Diokno said.
So far, CBDCs are preferable for Bitcoins and other privately-issued cryptocurrencies, he said.
“While a CBDC is a digital currency, it fundamentally differs from privately-issued currencies like cryptocurrencies," he said.
A general purpose or retail CBDC is widely accessible and could be used for retail transactions and other purposes.
A wholesale CBDC, meanwhile, has restricted access and is used as digital settlement for wholesale transactions. This is mainly for banks and other financial institutions.
A token-based retail CBDC requires verifying the validity of the payment transaction or the validity of the object used to pay. Units of CBDC are transferred between the wallets of users.
An account-based retail CBDC requires verifying the identity of the account holder. Individuals would have accounts with the central bank which verifies the accounts to settle transactions.
The study also identified the following benefits.
- It addresses the decline in use of physical cash. This is true in the case of some countries that are seeing a marked decline in the use of physical cash.
- It promotes financial inclusion, as it provides another means to perform financial transactions.
- It widens the range of options for monetary policy. Aside from cash and bank deposits, CBDC adds a third form of central bank liability that may be used for monetary policy.
- It encourages innovation in the payments system, as it presents another form of competition with privately-issued digital currencies.
Countries and states already looking into issuing CBDC include the Marshall Islands, the Easter Caribbean Currency Union, China, Sweden, and the Bahamas.
China has made considerable progress and among the most vocal in advocating digital currencies.
According to a Reuters report, most countries under the G20 were exploring, developing or testing digital currencies.
-- with a report from Warren de Guzman, ABS-CBN News and Reuters