Once its "Project Agila" ends in January 2025, the Bangko Sentral ng Pilipinas (BSP) will craft a three- to five-year roadmap in preparation for a possible central bank digital currency (CBDC), a top official said.
During a breakout session at the Philippine Institute for Development Studies' (PIDS) 10th Annual Public Policy Conference, BSP Deputy Governor Mamerto E. Tangonan disclosed that the second and final run of Project Agila's phase two or proof-of-concept stage was completed last Sept. 10, paving the way for the central bank and the six participating financial institutions to assess their experience and then report on the viability of a CBDC.
To recall, Project Agila was launched in December 2022 to orient the BSP as well as financial institutions on the potentials of blockchain and tokenization in enhancing the national payment system. Specifically, this project targeted 24/7 wholesale fund transfers.
The project's six payment system participants included BDO Unibank Inc., China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corp., Union Bank of the Philippines, and Maya Philippines Inc.
Tangonan later told Manila Bulletin that following the BSP's public report on Project Agila coming out this November, the next step will be a medium-term roadmap informed by their assessment with the six financial institutions.
"We'll sit down with the banks to [ask], right now, are you confident enough that you can handle this? Is this something that is useful to you and your customers? What's our product profile when you want to launch?" Tangonan said in an interview.
The BSP official said they will determine if banks would prefer just wholesale fund transfers, or also include cross-border payments and security settlement, citing that the Bureau of the Treasury (BTr) had already issued tokenized bonds that also entail tokenized payment instruments, preferably a CBDC.
Tangonan noted that so far, they found interbank fund transfers under Project Agila as good for liquidity and default management.
Other uses of a CBDC like settling tokenized treasury bonds will be included in the planned roadmap, he said.
In general, this roadmap will put in place the potential products, policies, regulations and economics supportive of a CBDC, he added.
"Basically, is this beneficial? If it's beneficial, where can we implement this? ... That's the roadmap," Tangonan said.
CBDCs can either be wholesale — for exclusive use of financial intermediaries -- or retail, for the wider economy.
But Tangonan said that for him and his team at the BSP's payments and currency management sector, a retail CBDC isn't attractive so far, as issuing such may be challenged legally, unlike wholesale where the BSP has legal mandate.
He also noted that the Reserve Bank of Australia recently reported good cost-benefit from wholesale CBDC, but not for retail.
Tangonan pointed out that the Philippines already has a working retail payment system, which includes InstaPay, PESONet and QR Ph.