BSP eyes CBDC for settling gov’t tokenized bonds

DUMAGUETE CITY — The Bangko Sentral ng Pilipinas (BSP) on Monday said it is looking at using the planned wholesale central bank digital currency (CBDC) to settle government bonds, with a second proof of concept currently in the works.

According to BSP deputy governor Mamerto Tangonan, the central bank is still working to establish a strategic roadmap on the CBDC exploring pertinent use cases, following Project Agila or the first proof of concept.

“What we are thinking of doing next is to focus on wholesale CBDC settling government bonds, kasi (because) the Bureau of the Treasury moved ahead with their pilot of the tokenized treasury bonds. It just lacked a settlement instrument, so we will be providing that with CBDC,” he said.

To recall, the central bank completed testing for Project Agila in 2024, covering functional, performance, security, exploratory, and end-to-end programmability testing.

The BTr launched its maiden offering of Philippine peso-denominated tokenized treasury bonds (TTBs) to raise P10 billion from the domestic bond market. They were issued in the form of digital tokens, maintained in the BTr’s distributed ledger technology (DLT) registry.

CBDCs are digital money denominated in the national unit of account and are direct liabilities of the central bank, in this case the Philippine peso and the BSP.

The central bank is primarily looking at the wholesale use of CBDCs which may be utilized by commercial banks and other financial institutions for interbank payments, securities, transactions, and cross-border payments.

Tangonan declined to give a timeline on the second proof of concept, as he said the scope will first have to be determined.

For the second round of proof of concept, Tangonan said the BSP is looking to widen its scope and work with more participating banks from just six previously.

“We need to broaden that to more institutions so that all of us will learn from the next proof of concept, especially when we need to test the settlement of government bonds,” he said.—AOL, GMA Integrated News