The Bangko Sentral ng Pilipinas (BSP) is exploring the creation of their own digital currency – or digital fiat money -- with the accelerated growth of digital payments in the country.
BSP Governor Benjamin E. Diokno said they will know if they could consider issuing their own central bank digital currency (CBDC) by August.
“We just recently formed a technical working group (TWG) to study the feasibility and policy implications of issuing central bank digital currency. We have to first look into the findings of the group before making any decisions,” said Diokno on Wednesday. “I expect the TWG to submit their report next month,” he added.
CBDCs are legal money because it will be issued or produced by the central bank. These are not cryptocurrencies which are decentralized digital currencies based on block chain technology.
Diokno said cryptocurrencies will not replace banknotes or coins while CBDCs could. “We do not see it (cryptocurrencies) significantly affecting the present demand for physical currency,” he said, although he noted that block chain technology “continues to elicit interest around revolutionizing the delivery of financial services.”
The BSP has recently enhanced the country’s banknotes security features with the latest anti-counterfeiting technology, and also made it more responsive to the elderly and visually impaired by improving tactile marks.
The designs of all five of the New Generation Currency (NGC) banknotes were improved upon. Specifically, the 1000-piso and the 500-piso were enhanced with a roller bar effect and it also has color-shifting.
“While digital payments are on the rise, there are still some sectors in our society that use cash to purchase goods and pay for services. And it is equally our priority to ensure that banknotes and coins are accessible, recognizable, and easily authenticated,” said Diokno during the launch of the enhanced NGCs. The NGC was first circulated in 2010 and the BSP regularly change currency designs and security features every 10 years.
Last year, Diokno deferred any talk on CBDCs as he has said he would rather focus more on the use of the Quick Response (QR) Code Standard. The BSP has been encouraging the use of the national QR code standard and online payment facilities for government transactions.
In a forum Wednesday, Diokno reiterated the importance of digital transactions amid COVID-19 health crisis, that the volume and value of the combined transactions of PESONet and InstaPay significantly increased during the lockdown.
“Efficiency in retail payments is really about speed, convenience and affordability, which can clearly be supported by a shift to electronic payments,” said Diokno. “It is our goal to have half of financial transactions—in volume and value—be in digital form by 2023, if not sooner. We have gained significant strides in this direction through the adoption of the national QR code standard, as well as the use of online payment facilities for government transactions.”