Central bank zeros in on securities, cross-border payments for digital Philippine peso

Project Agila findings will steer wholesale CBDC strategy for financial institutions.

The Bangko Sentral ng Pilipinas (BSP) has identified financial securities settlement and large-value cross-border payments as the priority use cases for a wholesale central bank digital currency (wCBDC).

The use cases were identified in the BSP's Project Agila report, which explored how a wholesale CBDC could support payment and settlement activities with participating financial institutions.

A wholesale CBDC is a digital form of central bank money intended for use by commercial banks and other financial institutions.

Like the country's existing Real-Time Gross Settlement (RTGS) system, banks would hold accounts with the BSP, with balances updated as transactions are settled.

The main difference is the use of distributed ledger technology, which could enable greater automation, faster transaction processing, and lower transaction costs, the report said.

Eli M. Remolona, Jr., governor of the BSP, said wholesale CBDCs could improve the country's payments infrastructure.

"Wholesale CBDCs can enhance efficiency in the payments infrastructure and develop new financial services that could address evolving needs in the national payments ecosystem," Remolona said.

The BSP also said applying a wholesale CBDC to financial securities transactions could reduce settlement risk by shortening the time between trade execution and final settlement.

Findings from Project Agila will be used to develop the BSP's CBDC Roadmap, which will outline the central bank's strategy for exploring and developing wholesale CBDC applications.

The roadmap will build on the project's findings as the BSP continues assessing how wholesale CBDCs could modernise payment and settlement systems for financial institutions.