The government of the Philippines has announced plans to roll out a pilot program in preparation for the launch of its central bank digital currency (CBDC). According to Benjamin Diokno Governor, Governor of Bangko Sentral ng Pilipinas (BSP), the Philippines central bank, the aim of the project is to enhance “the payment system’s safety, resiliency, and efficiency.”
The Philippines will be joining several other countries that have interests in the implementation of CBDCs. Many governments and jurisdictions see a CBDC as an alternative to the more volatile cryptocurrencies.
Diokno also noted that CBDCs will have a massive impact once they are launched by the government. He stated that they will come in handy for government-run cash assistance programs. He added that the pandemic has given credence to the need for a digital currency that will support the most vulnerable segments of society.
The Project Also Has Potential Difficulties
However, the governor did not fail to highlight potential difficulties that may stand in the way of the project, despite its numerous potential benefits. One of the major problems is the lack of technological infrastructure, according to Diokno.
As a result, regulators and monetary authorities will need to develop the technological capacity and requisite skills for the effective implementation and management of the risks of CDBC issuance.
More Countries Show Interest In The Launch Of A CBDC
CBDCs have gained immense support from various governments and jurisdictions. Many of the central banks agree that cryptocurrencies pose major risks to the continuous operation of the traditional financial system.
While the traditional system is more stable, crypto assets are one of the most volatile assets in the world. When it comes to the development of CBDCs, China is a step ahead of other countries, after successfully carrying out pilot tests on the digital yen.
However, the United States is still dragging its feet as the government is still looking at the economic benefits of launching a digital dollar. However, there have been increased calls by some government officials to speed up the launch of a CBDC in the U.S.
Lael Brainard, a member of the Federal Reserve’s Board of Governors, wants the U.S. to spearhead policy developments in CBDC. He warned that the dominance of the U.S. dollars as a cross-border payment could face serious competition when other countries launch their CDBCs.
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