The Bangko Sentral ng Pilipinas (BSP) has chosen the Hyperledger Fabric blockchain as the foundation for Project Agila, its central bank digital currency (CBDC) trial.
The bank said on Thursday that it made the selection for the CBDC with input from the International Monetary Fund (IMF), the BIS Innovation Hub and other financial institutions.
CBDCs represent a digital form of currency, denominated in the national unit of account, and they serve as direct obligations of the central bank. Among these, wholesale CBDCs stand out as digital currencies designed for issuance to commercial banks and other financial institutions. They are primarily utilized for settling interbank transactions, securities exchanges, cross-border payments and similar financial operations.
Hyperledger Fabric is a versatile and customizable blockchain platform designed for businesses and organizations. Its focus on permissioned networks, modularity, privacy features and scalability make it well-suited for a wide range of enterprise applications beyond cryptocurrency.
The Philippines central bank lauded the potential lack of restrictions a CBDC would offer, stating that a CBDC could potentially be accessible around the clock, seven days a week. Additionally, the adoption of wholesale CBDC technology could enhance the security of digital record-keeping, reducing the susceptibility to fraud and cyberattacks by improving the irrevocability of transactions.
A recent report from the IMF brought to light the Philippines’ potential utilization of a CBDC for facilitating cross-border payments. There was a time when the Philippines showed interest in participating in Project Dunbar, a multi-CBDC initiative led by Singapore prior to its conclusion.
However, the MBridge Project, another significant cross-border CBDC endeavour in Asia, is progressing. This initiative includes the central banks of Thailand, Hong Kong, China, and the UAE, with several other nations closely observing its developments.
“By the end of Project Agila, the pilot participants are expected to have a clearer understanding of CBDC technology and assess the capability of wholesale CBDCs to foster advancements in the large-value payment system. The results of the assessment are seen to guide the BSP and the industry on a possible launch of wholesale CBDCs in the Philippines,” said Eli Remolona Jr, BSP governor.
Read more: Bank of Canada opens public consultation on digital Canadian dollar
Read more: Government of Nigeria approves official blockchain policy
Multiple countries are consider CBDCs
According to a report by the Atlantic Council, the number of countries considering the adoption of CBDCs has surged to over 114. This marks a substantial increase from May 2020 when only 35 nations were pondering CBDC usage. In 2023, more than 20 countries, including Australia, Thailand, Brazil and India, are poised to take substantial steps forward by initiating pilot projects aimed at the eventual launch of CBDCs.
First and foremost is China, which designed and implemented its e-RMB, or Digital Yuan, in late 2022.
Sweden has also actively researched the possibility of introducing an e-krona. In the European Union, the European Central Bank (ECB) had been engaging in discussions and research regarding the potential launch of a digital euro. Additionally, the Bank of Canada has been studying the feasibility of a digital loonie.
Follow Joseph Morton on Twitter
joseph@mugglehead.com
