Philippine central bank wraps up CBDC trial, sees future in wholesale tokens

The Philippine central bank has completed proof-of-concept trials of wholesale CBDC designed to enable 24-hour fund transfers between financial institutions.

The Bangko Sentral ng Pilipinas has completed testing of Project Agila, a proof of concept of a wholesale central bank digital currency aimed at facilitating interbank payments, the central bank announced in a press release on Thursday, Dec. 5.

The press release states that the initiative allows financial institutions to securely transfer funds even after business hours, which includes evenings, weekends and holidays, using distributed ledger technology hosted on Oracle Cloud Infrastructure.

According to BSP, the pilot tested various aspects of the system, including functionality, performance, security and programmability.

Unlike retail CBDCs for public use, wholesale CBDCs are issued by central banks for use by commercial banks and financial institutions in high-value transactions such as interbank payments, securities swaps, and cross-border transactions.

BSP Governor Eli M. Remolona Jr. highlighted the potential benefits of wholesale CBDCs, stating that they are expected to “improve liquidity management, reduce exchange risks, and support financial stability.” Although the outcome of the pilot study has not been announced, Remolona added that information gained from Project Agila will inform the central bank’s future CBDC roadmap, which aims to leverage digital technologies to improve the efficiency and resilience of the national payment system.

Introduced in March 2022, Project Agila was designed to evaluate the potential of CBDC technology to improve the efficiency and reliability of the Philippines’ large-value payment system. While the Bangko Sentral ng Pilipinas has not yet committed to adopting a CBDC, the initiative highlights the country’s broader strategy to embrace emerging technologies that aims to accelerate the digitalization of its financial infrastructure.