The Bangko Sentral ng Pilipinas (BSP) has identified financial securities settlement and high-value cross-border payments as among the most promising applications for a wholesale central bank digital currency (wCBDC), as it ramps up efforts to modernize the country’s financial infrastructure.
The potential use cases were outlined in the BSP’s Project Agila report, a landmark initiative that serves as a foundation for the central bank and participating financial institutions (FIs) to evaluate how a wholesale CBDC can improve the efficiency, security, and resilience of the Philippine payments ecosystem.
A central bank digital currency (CBDC) is a digital form of sovereign money issued by the central bank. Unlike retail CBDCs intended for public use, a wholesale CBDC is designed exclusively for commercial banks and other financial institutions to facilitate high-value financial transactions.
Similar to the country’s existing Real-Time Gross Settlement (RTGS) system, a wholesale CBDC would allow banks to maintain settlement accounts with the BSP, with balances automatically credited or debited as transactions are completed. However, the use of distributed ledger technology (DLT) introduces significant advantages, including greater automation, faster transaction processing, improved transparency, and lower operational costs.
BSP Governor Eli M. Remolona, Jr. said the initiative represents an important step toward building a more innovative and future-ready financial system.
“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 central bank also noted that applying a wholesale CBDC to securities transactions could substantially reduce settlement risks by shortening the time between trade execution and final settlement. This would improve liquidity management, minimize counterparty risk, and strengthen confidence in the country’s capital markets.
Insights gained from Project Agila will guide the development of the BSP’s forthcoming CBDC Roadmap, which will define the central bank’s long-term strategy for exploring and implementing high-impact wholesale CBDC applications in the Philippines.
The Project Agila report is available on the BSP’s official website.