The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, recently completed trials for Project Agila, a proof-of-concept for a wholesale Central Bank Digital Currency (CBDC) aimed at facilitating round-the-clock fund transfers among financial institutions. This initiative is designed to streamline interbank payments and allow for secure transfers to take place even during non-business hours, such as evenings, weekends, and holidays. The system utilizes distributed ledger technology hosted on Oracle Cloud Infrastructure to ensure the security and efficiency of transactions.
The pilot testing for Project Agila focused on various aspects of the system, including functionality, performance, security, and programmability. Wholesale CBDCs differ from retail CBDCs in that they are issued by central banks for use by commercial banks and financial institutions in high-value transactions, such as interbank payments, securities settlements, and cross-border transactions. BSP Governor Eli M. Remolona, Jr. emphasized the potential benefits of wholesale CBDCs, stating that they could enhance liquidity management, reduce settlement risks, and support financial stability.
While the results of the pilot testing have not been disclosed, Governor Remolona indicated that insights gained from Project Agila would help inform the central bank’s future CBDC roadmap. The BSP’s overarching goal is to leverage digital technologies to enhance the efficiency and resilience of the national payment system. Project Agila was introduced in March 2022 with the aim of evaluating the potential of CBDC technology to improve the efficiency and reliability of the Philippines’ large-value payment system. Although the BSP has not yet committed to adopting a CBDC, the project underscores its broader strategy to embrace emerging technologies and accelerate the digitization of the nation’s financial infrastructure.
In addition to Project Agila, the BSP has been proactive in exploring other digital initiatives. In a bid to further enhance the efficiency of the financial system, the central bank has been actively promoting the use of digital technologies among financial institutions. The adoption of CBDCs could potentially reshape the landscape of the financial sector in the Philippines, with the potential to revolutionize how transactions are conducted and settlements are made.
As the BSP continues to pave the way for the adoption of digital currencies in the country, it is crucial for stakeholders in the financial industry to stay informed and adapt to these emerging trends. With the potential benefits of wholesale CBDCs in improving liquidity management, reducing settlement risks, and supporting financial stability, the Philippines could be at the forefront of a digital revolution in the financial sector. By leveraging digital technologies and embracing innovation, the BSP aims to modernize the national payment system and pave the way for a more efficient and resilient financial infrastructure.
