Digital currency is ‘experimental’ –BSP
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno yesterday said its central bank digital currency (CBDC) project would be an “experiment” and not yet a full-blown implementation.
Diokno, in an interview with ANC, also clarified that, unlike cryptocurrency assets, CBDCs are issued by the central banks.
During the pilot, set to begin in the fourth quarter, the BSP will test the use of CBDCs for wholesale transactions with select banks limited to the Philippines.
“We are going to do this on an experimental basis which will start in the fourth quarter of this year. We will experiment with some large financial institutions limited in the Philippines,” Diokno said.
“We need to learn to walk before we run so that’s the purpose of this pilot, not a fullblown implementation of CBDC,” he added.
During the pilot, the BSP will consult with its peers to assess the impact of CBDCs, Diokno said.
Meanwhile, Diokno said the administration’s economic team is open to revision in growth targets but it would be data-driven and would be officially made by the entire Development and Budget Coordination Committee (DBCC).
The International Monetary Fund (IMF) earlier revised upwards its gross domestic product growth (GDP) growth forecast for the Philippines to 6.5 percent from 6 percent while downgrading other forecasts globally.
Diokno said it’s “good news” for the country.
The DBCC’s growth target for the year was set at 7 to 9 percent.
Interest rate hikes, which could start to happen in June, will also be data-driven, Diokno said.
“We really have to balance. Whether the recovery that we’re seeing is sustainable. That’s why we’re going to wait for the GDP number for the first quarter this year,” he said.
The country’s benchmark borrowing rate has been kept at its record low of 2 percent since November 2020 to support the economic recovery from the COVID-19 pandemic.
As for inflation, Russia’s invasion of Ukraine and its impact on oil and other commodity prices are reflected in the revised 4.3 percent average inflation forecast for the year, Diokno said.