According to the announcement made by the Philippian government, they are now introducing a pilot program to gear up for launching the country’s central bank digital currency (CBDC). Bangko Sentral ng Pilipinas (BSP) holds the status of central bank of Philippines. The governor of the central bank in Philippines, Benjamin Diokno, stated that the purpose of this digital currency was to improve the efficiency, resilience and safety of the payment system. The Philippines has now joined the list of a number of other nations that are also interested in launching their own CBDCs. A number of jurisdictions and governments around the world see these central bank digital currencies as a better option to cryptocurrencies, which are deemed more volatile.
Diokno went on to say that once the CBDCs are introduced by the respective governments, the digital currency would undoubtedly have a massive impact. He said that they would be immensely useful for operating the cash assistance program that are operated by the government. He also asserted that the global coronavirus pandemic had given enough evidence for the need of a virtual currency because it will come in handy for providing support to the aspects of society that are vulnerable. However, the governor also went ahead and highlighted the potential hurdles and difficulties that could stand in the way of the project.
Even though CBDCs do have the potential of offering high benefits, Diokno said that they could not ignore the lack of technological infrastructure required for such digital currencies. Therefore, he said that monetary authorities and regulators would have to develop the requisite skills and technological capacity that would be needed for the effective management of risks and implementation of CBDC issuance. As mentioned earlier, these central bank digital currencies have managed to garner a great deal of support from various jurisdictions and governments.
A number of global central banks are in agreement that cryptocurrencies are highly volatile, which means that they pose prominent risks and can hamper the operation of the traditional financial system. The latter is quite stable, but cryptocurrencies have proven to be some of the most volatile assets in the world. As far as the development of a CBDC is concerned, China has managed to stay far ahead of most countries, as the country has already run its pilot program for a digital yen in the country. But, it appears that the United States has not kept up and is dragging its feet while looking at the perks of introducing a digital dollar.
Nonetheless, there have been increased calls from some officials of the US government to speed up the process of launching a CBDC in the country. A member of the Board of Governors of the Federal Reserve, Lael Brainard is interested in leading the US for developing a policy that would focus on a CBDC. He had also warned that the dominance of the US dollar as a means of cross-border payment could also face some tough competition when CBDCs are introduced by some of the other countries around the world.