BSP Completes Testing for Wholesale Central Bank Digital Currency Pilot

The Bangko Sentral ng Pilipinas (BSP) has successfully concluded testing for Project Agila, a proof-of-concept pilot for its wholesale Central Bank Digital Currency (CBDC). The project aims to familiarize the BSP and financial institutions with technology solutions for large-value payments.

While the BSP has not disclosed specific findings, the evaluation covered various aspects, including functionality, performance, security, and end-to-end programmability.

Benefits and Roadmap

BSP Governor Eli Remolona Jr. highlighted the advantages of wholesale CBDCs, stating that they could enhance liquidity management, reduce settlement risks, and bolster financial stability.

“Insights from this project will guide the BSP’s CBDC roadmap. Our goal is to leverage new technologies to further enhance the efficiency and resilience of the national payment system,” he said.

CBDCs, which represent digital currency directly backed by the central bank, are denominated in the national unit of account, such as the Philippine peso. Wholesale CBDCs are intended for interbank payments, securities transactions, and cross-border payments.

Next Steps

The BSP will begin roadmapping for wholesale CBDC implementation in January, according to BSP Deputy Governor Mamerto Tangonan.

“Now that we know more than we did before, we’ll assess the next steps—whether to launch the CBDC, conduct a second round of proof-of-concept testing, or refine its application,” Tangonan said.

Retail vs. Wholesale CBDCs

Tangonan noted that while wholesale CBDCs show clear potential for benefits such as cross-border trade finance and securities settlement, the BSP has not yet identified compelling reasons to introduce a retail CBDC.

“Wholesale CBDCs show promise, but we don’t see convincing benefits for retail. However, if gaps emerge in our current digital payment system, we may consider issuing a retail CBDC,” he explained.

The completion of the pilot aligns with the BSP’s timeline to finish testing by year-end, setting the stage for further evaluation and potential implementation of CBDCs to improve the large-value payment system.