Diokno says BSP in no hurry to adopt digital currency

The Bangko Sentral ng Pilipinas (BSP) will continue to study the possibility of developing its own digital currency but will seek to build up its capacity to handle digital-currency operations.

“We are developing our capacity to adopt it but we are not in a hurry… at the moment,” Governor Benjamin E. Diokno said during the Institute of International Finance’s Asia-Pacific summit Friday, in response to a question about developing a central bank digital currency (CBDC).

“We remain supportive of financial innovations brought about by technological advancements knowing that new and promising enhancements to the delivery of our mandate may still arise and therefore, we will look at it as we consult with other central banks,” Mr. Diokno added.

The central bank is in possession of the results of a study conducted by a technical working group formed before the pandemic, but he did detail the findings.

Late last year, Mr. Diokno had said the BSP will continue to assess the issue of a digital currency but may not move to issue one within the next five years.

A CBDC is centralized, issued, and regulated by a central bank, and can serve as a medium of exchange or store of value. It is deemed less prone to price volatility unlike decentralized cryptocurrencies like Bitcoin.

It may also act as a representation of actual paper-based currency notes. Central banks in China, Sweden, and Singapore are among those considering the issue of CBDCs.

The BSP has cited potential benefits of such an issue, including broader financial inclusion with the decline of bills and coins, additional options for monetary policy action, and heightened competition and innovation in the financial system.

Some of the risks include privacy violations, higher banking costs, money laundering, terrorism financing and other cybersecurity issues.

On the bank’s financial inclusion goals, Mr. Diokno said the BSP retains its target ofa 50% share of digital for all financial transactions, and 70% penetration of financial accounts in the adult population by 2023.

“With the pandemic, we will accomplish such goals earlier than originally envisioned, so that may be before the end of 2022,” he said. – Beatrice M. Laforga

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