Summary
The Bangko Sentral ng Pilipinas (BSP) has noted the potential application of wholesale central bank digital currency (CBDC) for settlement of financial securities and large-value cross-border payments, based on its Project Agila report. BSP Governor Eli Remolona stated that wholesale CBDCs can enhance efficiency in payments infrastructure and develop new financial services. Adopting wholesale CBDCs for financial securities transactions could significantly reduce settlement risks by narrowing the time gap between trade execution and final settlement. Banks using a wholesale CBDC would maintain an account with the BSP, similar to the current real-time gross settlement system.
Key Facts
- BSP exploring wholesale CBDC based on Project Agila report
- Use cases: financial securities settlement, large-value cross-border payments
- Governor Remolona: wholesale CBDCs can enhance payments infrastructure efficiency
- Settlement risk reduction: narrowing time gap between trade execution and settlement
- Banks would maintain BSP accounts similar to current RTGS system
- Part of broader ASEAN digital payment infrastructure development
- Follows BSP's previous retail CBDC pilot (Project CBDCPh)
Why It Matters
The Philippines joins a growing list of ASEAN central banks exploring wholesale CBDCs as the next evolution of payment infrastructure. Unlike retail CBDCs aimed at consumers, wholesale CBDCs target interbank settlement efficiency, reducing the latency and counterparty risk in securities and cross-border transactions. For a remittance-dependent economy like the Philippines, wholesale CBDC-linked cross-border payments could lower the cost and increase the speed of the $40 billion annual remittance flow. Project Agila's findings could influence the BSP's digital currency roadmap and position the Philippines within ASEAN's broader payment connectivity initiatives.