Following the successful technical testing of the Bangko Sentral ng Pilipinas’ (BSP) wholesale central bank digital currency (wCBDC), which demonstrated the feasibility of 24/7 interbank fund transfers, the BSP is planning to formulate a roadmap to further explore and refine the technology’s long-term applications.
“Testing has confirmed the technical feasibility of using distributed ledger technology (DLT) and tokenization for issuing central bank money and enabling off-business-hours inter-institutional transfers through a programmable ledger,” read the BSP’s Project Agila report released on Wednesday, July 1.
Project Agila, the BSP’s wCBDC initiative, demonstrated that DLT and tokenization have significant potential to expand the capabilities of a wCBDC by enabling interbank payments beyond normal business hours.
A central bank digital currency (CBDC) is a broad category of digital money issued directly by a central bank, representing a secure, risk-free asset for financial transactions. A wCBDC is a type of CBDC designed exclusively for high-value institutional transactions among financial institutions (FIs), government agencies, and financial market infrastructures.
According to the report, one potential application is facilitating transactions when the Philippine Payment and Settlement System Plus (PhilPaSSplus)—the country’s primary real-time settlement infrastructure—is unavailable.
During proof-of-concept tests covering the wCBDC’s core functions, participating FIs found that the technology could significantly improve liquidity management through real-time settlement, automation, and programmability.
“Wholesale CBDCs can enhance efficiency in the payments infrastructure and develop new financial services that could address evolving needs in the national payments ecosystem,” BSP Governor Eli M. Remolona, Jr. said in a July 1 statement.
Following the project’s final phase and consultations with the BSP, participating FIs, and other payment system stakeholders, the project team recommended that the central bank continue its wCBDC initiative by focusing on “tokenized financial securities settlement and institutional cross-border payments.”
Other payment system stakeholders include Philippine Dealing & Exchange Corp. (PDEx), Philippine Depository & Trust Corp. (PDTC), the Bureau of the Treasury (BTr), the Securities and Exchange Commission (SEC), the Bankers Association of the Philippines (BAP), and Philippine Payments Management Inc. (PPMI).
According to the report, the BSP could formulate a CBDC “strategic roadmap that charts the strategic initiatives for exploring, testing, and developing use cases that address real-world constraints in capital market development, enabled by tokenization and CBDC.”
To maximize the efficiency and economic benefits of wCBDC innovations, the BSP said the project’s eventual rollout must be anchored on security, scalability, and interoperability.
“Seamless integration with existing payment systems will prevent fragmentation and enable innovative financial services that address gaps in the digital Philippine economy,” the central bank said.
