As the financial world continues to transform, new forms of money are challenging traditional monetary infrastructures that have been around for a long time. Currently, central bank digital currencies (CBDCs) have attracted the attention of several countries, including the Philippines.
At a joint event hosted by Bangko Sentral ng Pilipinas (BSP) and the Alliance for Financial Inclusion, Benjamin E. Diokno, the governor of the Central Bank of the Philippines, said: announced the rollout of Project CBDCPh, a pilot implementation of a CBDC for the country. According to Diokno, the project aims to “improve the security, resilience and efficiency of the payment system”.
“The project aims to build organizational capacity and practical knowledge of key aspects of CBDC relevant to a use case around addressing frictions in the national payment system.”
Diokno also emphasized the potential impact of CBDCs. The BSP governor noted that a CBDC could assist with government-run cash assistance programs. He underlined how the pandemic demonstrated the utility of account-based distribution of financial aid. Diokno believes this can be used to “provide direct support to the most vulnerable sections of society”.
Bangko Sentral ng Filipinas Governor Benjamin Diokno. Source: philstar.com
While there are many potential benefits, the governor also pointed out potential problems the project could face, such as the lack of technology infrastructure. “Monetary authorities and regulators will need to build the required skills and technological capacity to effectively implement and manage the risks of CBDC issuance,” Diokno said.
Related: Crypto Twitter Isn’t Happy With Jamaica’s CBDC Name And Logo
In the United States, Lael Brainard, a member of the Federal Reserve’s Board of Directors, urged the US to lead research and policy when it comes to CBDCs. Citing developments in China, Brainard says the US dollar’s dominance of cross-border payments could be affected by CBDC developments in other countries.