Last month, it was reported that Bangko Sentral ng Pilipinas (BSP) has announced that they have entered into an exploratory phase for the Central Bank Digital Currency (CBDC) of the Philippine Peso. The announcement came at a time when several central banks across the globe have announced their respective CBDC initiatives in an increasingly evolving decentralized financial framework that is riding the wave of Blockchain’s disruptive effects.

Despite the announcement, the BSP has held back on any additional information on integration and use cases for the CBDC Philippine Peso.

What are CBDCs?

CBDCs are digital currencies in the form of their respective countries’ fiat currencies. CBDCs are issued by a country’s central bank and unlike the traditional fiat currencies issued by banks, CBDCs operate under a decentralized financial framework that offers a faster, more efficient, and transparent remittance from the central banks, to a nominated bank toward entities such as businesses, institutions and the digital wallet of a consumer.

Why CBDCs?

CBDCs operate and are utilized under a decentralized – financial framework. Its inner workings come with several advantages under the Blockchain:

• Transparent but viewed only by authorized participants
• Faster transmittal as its KYC and AML are embedded on a distributed ledger process
• Real-time transactions and credit/debit process
• CBDC infrastructure is more efficient and will save billions annually from traditional desk/bank counter work.
• Time zones won’t be a hindrance to liquidity, scalability, and acceptance processes.

CBDC in the Philippines

Despite the BSP admitting that the Philippine Peso CBDC is far from the integration and use case phase, there is much to look forward to as global banks are making progress with their respective CBDC research projects. From the utilization of commercial aspects of CBDC for each digital wallet of a banking consumer as its most basic application, the business and corporate side of CBDC have a potential for disruption and opportunities. This includes Foreign Exchange (FOREX) applications, wholesale of CBDCs, and investment and banking incentives for the transfiguration of fiat to CBDC.
The Philippines have traditionally been a quick adopter of technology and the aspect of CBDC won’t be too different as once global banks have made a breakthrough and started creating a framework for the circulation and inter-trade of digital currencies, the Philippines won’t be too far behind as its fiscal health is among the world’s most resilient – often outlasting financial downturns and on the consumer side — Filipinos are among the world’s most active when it comes to cryptocurrency and digital currency trading.

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DynaQuest is an award-winning Blockchain solutions provider that specializes in the integration of Blockchain and Frontier Technology into industries and economies. The company is working on sustainable development and technology as catalysts for development projects.