Philippine Central Bank Launches a CBDC Pilot Project

The BSP (Bangko Sentral ng Pilipinas) has decided to pursue a pilot project, Project CBDC-Ph, to test the use of a wholesale CBDC for large-value financial transactions on a 24/7 basis across a limited number of financial institutions.

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The project was announced by BSP governor Benjamin Diokno during a roundtable discussion at the IMF-World Bank meetings.

Diokno said "Project CBDC-Ph" marks a major step for the Philippine central bank as well as for the entire financial industry to better understand the opportunities and risks of wholesale CBDCs.

He said lessons from the pilot will be used to construct BSP's medium- to long-term roadmap for more advanced wholesale CBDC projects, which will be aimed at further strengthening the Philippine payment system.

Project CBDC-Ph is led by an intersectoral project management team to ensure coverage of key operational areas – including policy and regulatory considerations, technological infrastructure, governance and organisational requirements, legal matters, payment and settlement models, reconciliation procedures, and risk management.

Diokno said that a wholesale CBDC may contribute to addressing frictions on large cross-border foreign currency transfers, including to reduce transaction costs, shorten processing times, and enhance the transparency of such transfers.

A wholesale BCDC can also help address settlement risk exposure from using commercial bank money in equities and operating intraday liquidity facilities, he added.

The BSP is exploring the potential use of wholesale CBDCs in areas where they can yield the greatest value-adding benefits to the payment system.

The launch of Project CBDC-Ph follows two years of exploratory study, research and pre-testing, as well as work to identify potential use cases for a wholesale CBDC in the Philippines.