Banknote withdrawals from the Bangko Sentral ng Pilipinas (BSP) slowed to single-digit growth last year from 12.5 percent in 2024, reflecting a possible shift toward digital channels for larger-value transactions as well as softer economic activity.

“You could think of several reasons for that. One could be slower gross domestic product (GDP) growth,” BSP Deputy Governor Mamerto E. Tangonan told reporters during a media roundtable on Monday. GDP growth slowed to a post-pandemic low of 4.4 percent in 2025.

Tangonan added that another factor could be the shift to digital channels for moving larger amounts of money due to added convenience.

Broadly, the slowdown in banknote withdrawals is tied to how Filipinos manage their finances. “If consumers are not withdrawing, the banks will not withdraw from us,” Tangonan explained. The BSP sees the potential for digital channels to eventually dominate, leading to a decline in physical cash use.

“Our vision is for every vendor, barber, stylist, market stall, and sari-sari store to accept digital payments—and for paying digitally to be free. I think that’s something we may achieve,” he said.

Data from the 2025 BSP Annual Report shows that the annual growth of banknote withdrawals rose by 6.2 percent in value to ₱1.57 trillion, up from ₱1.48 trillion in the previous year. This marked a sharp deceleration from the 12.5 percent growth pace recorded a year prior.

However, the volume of withdrawals grew by 12.9 percent, driven by a surge in demand for smaller bills used for daily transactions. Specifically, withdrawals of ₱100 and ₱50 banknotes spiked by 25.3 percent and 44.3 percent, respectively.

The central bank noted that it “demonstrated operational agility by realigning in-house production in the fourth quarter of 2025 toward lower denominations” to ensure banks could meet public liquidity needs.

Additionally, the BSP recorded a massive increase in the recirculation of clean currency. “Fit deposits grew by 32.3 percent in 2025, up from 4.6 percent in 2024,” the report stated, fueled largely by the performance of ₱1,000 polymer notes.

This trend implies that polymer banknotes have “continued to demonstrate superior durability relative to paper banknotes,” reinforcing the central bank’s shift toward cost-efficient materials.

Meanwhile, the use of coins for higher-value transactions continued to drop. The value of coin withdrawals fell further by 14.4 percent—deepening the 3.4 percent decline seen previously—as demand for the ₱20 coin dropped by 21.1 percent.

Tangonan also touched on the potential function of a wholesale central bank digital currency (wCBDC), noting that using the platform to replace PhilPaSSplus could be part of its scope, especially if banks settle interbank transactions using a wCBDC.

The BSP previously indicated that one potential application for a wCBDC is facilitating transactions whenever the Philippine Payment and Settlement System Plus (PhilPaSSplus)—the country's primary real-time settlement infrastructure—is unavailable.

A wCBDC is digital money issued by a central bank specifically for high-value transactions among financial institutions, government agencies, and financial market infrastructures.