After the "Project Agila" in the Philippines concludes in January 2025, the Central Bank of the Philippines (BSP) plans to develop a three-to-five-year roadmap to prepare for the potential launch of a Central Bank Digital Currency (CBDC).
During a breakout session at the 10th Annual Public Policy Conference of the Philippine Institute for Development Studies (PIDS), BSP Deputy Governor Mamerto E. Tangonan stated that the final test of the second phase (proof of concept phase) of "Project Agila" was completed on September 10, 2024, providing an opportunity for BSP and the six participating financial institutions to evaluate their experiences and report on the feasibility of the CBDC.
"Project Agila" was launched in December 2022, aiming to enhance the national payment system of the Philippines through blockchain and tokenization technologies, particularly the 24/7 wholesale fund transfer functionality.
The six payment system participants of the project include BDO Unibank Inc., China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corp., Union Bank of the Philippines, and Maya Philippines Inc.
In an interview, Tangonan mentioned that BSP will release a public report on "Project Agila" in November 2024, followed by the development of a midterm roadmap based on the assessment with the six financial institutions.
He said, "We will sit down with the banks to discuss, do you now have enough confidence to handle this? Is it useful for you and your clients? What are the product features when you want to launch?"
BSP will determine whether banks only wish to focus on wholesale fund transfers or also include cross-border payments and securities settlements. Tangonan noted that the Bureau of the Treasury (BTr) has already issued tokenized bonds, which also require tokenized payment tools, prioritizing the use of CBDC.
He pointed out that interbank fund transfers in "Project Agila" have performed well in terms of liquidity and default management.
Additionally, the settlement of tokenized government bonds using CBDC will also be included in the planned roadmap. He added that this roadmap will cover potential products, policies, regulations, and economics supporting CBDC.
He also noted that CBDC could be categorized into wholesale—for exclusive use by financial intermediaries, or retail—for broader economic use. However, Tangonan mentioned that from his and his team's current standpoint, retail CBDCs are less appealing due to potential legal challenges, whereas wholesale CBDCs align with BSP's legal mandates.
Tangonan also mentioned that the Reserve Bank of Australia recently reported good cost-effectiveness for wholesale CBDCs, but not for retail CBDCs.
Finally, he pointed out that the Philippines already has a well-functioning retail payment system, including InstaPay, PESONet, and QR Ph, hence retail CBDCs are not a primary focus at the moment.
