No plans for BSP-issued digital currency in next three years

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(FILE PHOTO)

Metro Manila (CNN Philippines, October 22) — The Bangko Sentral ng Pilipinas has no immediate plans to issue its own digital money after an initial study into its feasibility.

BSP Governor Benjamin Diokno told reporters on Thursday that he was not inclined to issue a central bank digital currency or CBDC despite a spike in activity in this new market.

"End of my term is 2023. I don't think so," Diokno said when asked if he plans to pursue CBDCs under his watch.

"Most central banks say they will not issue CBDC in the next five years, so not within my term," he added.

Some of the economies that introduced central bank-backed digital currencies are Marshall Islands and the Bahamas, as well as the Eastern Carribean Currency Union.

There are four types of these central bank digital money: a general purpose or retail CBDC, another for wholesale transactions, as well as token-based and account-based digital currencies.

"The economic effects of a CBDC as well as its implications for payments, monetary policy, and financial stability will significantly depend on its design and attributes," Diokno said.

Similar to cold cash, CBDCs must be backed by the central bank and must also be protected against counterfeiting.

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Currently, virtual currencies have been emerging as new ways to transact online, with its value fluctuating depending on supply and demand. Crypto currencies like Bitcoin are not guaranteed by any regulator, so a user shoulders all of the risks.

Among the benefits of CBDCs are wider financial access and reduced reliance on cold cash for transactions, making it more convenient to the public. Offering CBDCs would also reduce demand for new coins and peso bills, which could mean savings on the BSP's production and maintenance costs of fiat money.

However, the technical working group that studied the new currency could also mean shifting more customers away from the formal financial system.

For now, Diokno said the BSP will simply continue researching the idea and watching out the space for CBDC policies and trends.

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