BSP Unveils Project Agila; Eyes Democratized Securities via Central Bank Digital Currency
Summary:
The Bangko Sentral ng Pilipinas (BSP), under deputy governor Mamerto Tangonan, is piloting a project known as Project Agila to understand the implications of a wholesale central bank digital currency (wCBDC). This project involves six key Philippine banks and aims to be completed by the end of the year. The central bank's vision is to democratize access to securities and other financial assets in the Philippines through lower costs and smaller issue sizes. BSP also noted the potential of wCBDC to offer higher value services and more efficient transactions, despite concerns related to bank disintermediation and potential bottlenecks with a retail CBDC approach.
Further information about the Bangko Sentral ng Pilipinas’ (BSP) intention to explore the possibilities of wholesale central bank digital currency (wCBDC) has been disclosed, according to local media reports. The BSP Vice Governor in charge of payments and currency management, Mamerto Tangonan, made it known at a press briefing on March 6 that Project Agila - as the pilot scheme for the wCBDC is called - is slated for completion by year's end. Tangonan referred to the initiative as a process of acquiring knowledge. In Tangonan's words, "Our goal is to create a situation in the Philippines where securities and similar financial instruments can be democratized, enabling them to be bought in smaller quantities and at considerably lower fees so every Juan or Maria can turn their dreams of owning securities into reality." Six local banks— BDO Unibank, China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corporation, Union Bank of the Philippines, and Maya Philippines —are on board with this pilot in association with the BSP, employing the wCBDC for interbank fund transfers. Tangonan also expressed interest in the potential use of wCBDC for the provision of higher value-adding services, such as securities settlement. In a February press address, BSP governor Eli Remolona stated that the central bank was currently only evaluating a wCBDC, due to apprehension around banking disintermediation and similar issues that could arise with a proposed retail CBDC. He further stated that their CBDC would not be blockchain-based. The Philippines had initially shown interest in issuing a CBDC in 2020. The BSP’s Monetary Board, in 2022, pointed out the positive preliminary appraisal of a wCBDC and the proposed pilots to be initiated in that same year, which was then known as Project CBDCPh. The announcement of a pilot scheme deployment was made in April 2022. There was a pilot study conducted in 2023 by the Philippines, in collaboration with the Digital Dollar Project, Western Union, and BDO Unibank, to explore the use of retail CBDC for remittances. The outcome was that the proposed CBDC could offer lower costs while promoting transparency and competition. However, the project was charged with the task of improving transaction speed, given that the majority of remittances enter the Philippines after working hours.
Published At
3/8/2024 12:37:46 AM
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