In recent months, many central banks of the world kicked-off plans to accelerate the development of their central bank digital currency. Despite the rush among these institutions, the central bank of the Philippines is unsated to launch a digital currency. Instead, the bank wants to closely monitor the space and trends with CBDCs, which might last for three years.
However, they intend to continually research the idea of launching a digital currency during these times of hibernation.
Philippines’ First Move for CBDC
The central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP) first demonstrated interest in CBDC in July this year. At the time, BSP created a technical working group to research the feasibility and possible risks associated with CBDCs. From the initial study, the central bank concludes now isn’t the time to launch a digital currency..
Among other things, BSP highlights that they need to pay close attention to the attributes and design of the CBDC. This is because the economic effects, and other implications of CBDCs on financial stability, significantly depend on those factors. CNN Philippines reported on Thursday, citing the central bank’s Governor, Benjamin Diokno.
Diokno admits that he isn’t also inclined to launch a digital currency within his term. The Governor said his term ends in the next three years, and he doesn’t have any intention to pursue national digital currency. “Most central banks say they will not issue CBDC in the next five years, so not within my term,” Diokno added.
The Merits of CBDCs
Although BSP has no plans to issue a digital currency soon, the Governor highlights how it can benefit the country. Diokno did mention that it could reduce the country’s dependence on cold cash for transactions. The digital currencies can provide wider and convenient financial access to the public. Most importantly, the issuance of a CBDC can reduce the demand for the country’s new coins and peso bills.
In turn, the bank can save on the cost of maintaining and producing fiat money.
Rather than forging ahead with these benefits, however, the bank prefers to closely monitor the trend. According to Diokno, BSP will continuously research the concept for the foreseeable future.