Governor of the Central Bank of the Philippines Benjamin Diokno said that the bank will not launch its own digital currency, as most citizens of the state prefer to use cash.
In September, the Central Bank of the Philippines Bangko Sentral ng Pilipinas (BSP) began exploring the possibility of launching a digital Philippine peso to improve the quality of financial services. However, in a recent speech, BSP Governor Benjamin Diokno said that the central bank does not plan to launch it in the near future. He explained that the vast majority of the country’s residents prefer to use cash and are highly dependent on it. In addition, settlement systems in their current state allow making payments in the country quite efficiently, Diokno said.
According to BSP, 53% of Filipinos (about 58 million people) have an account with a financial institution. By the end of 2023, the regulator hopes to increase this figure to 70%. In 2020, only every fifth payment was made digitally. By next year, the Central Bank of the Philippines intends to increase the number of digital payments to 50%, but this does not require the use of the state cryptocurrency, Diokno said. Now the Central Bank is only studying various options for using it for international payments and settlements with securities.
Swarup Gupta, manager of the Economist Intelligence Unit, believes that the deployment of a state stablecoin in the Philippines will depend heavily on the success of the development of a digital identity system in the country. Now, the central bank’s hesitations about launching a digital currency are understandable as the Philippine economy is suffering from a host of issues that could make it difficult to launch a digital peso. Given the Philippines’ underdeveloped digital economy, the launch of a central bank digital currency could hinder financial inclusion, paradoxically, Gupta said. He explained that by launching a digital peso, the central bank could squeeze out commercial banks and other private players, as their services would no longer be needed.
As for conventional cryptocurrencies, the Central Bank of the Philippines considers them risky assets that allow them to bypass the banking system. Last year, BSP announced the introduction of mandatory licensing for companies working with digital assets.
