The Bangko Sentral ng Pilipinas (BSP) has announced its choice of the Hyperledger Fabric blockchain for Project Agila, its inaugural wholesale central bank digital currency (CBDC) trial. This selection came after consultations with key entities such as the International Monetary Fund (IMF), the BIS Innovation Hub, and other financial institutions.
Wholesale CBDCs are typically built on Distributed Ledger Technology (DLT) due to the existing central bank accounts held by banks. DLT offers enhanced programmability features and the capability to function as an on-chain settlement asset for various blockchain assets like tokenized securities.
The BSP emphasised the DLT system’s 24/7 availability, facilitating interbank transactions beyond traditional payment system operating hours. The assessment of technology choices employed a scoring system, evaluating factors like accessibility, security, continuous availability, interoperability, and programmability.
Governor Eli Remolona Jr. of BSP stated, “By the conclusion of Project Agila, pilot participants should possess a clearer comprehension of CBDC technology and its potential to drive improvements in the large-value payment system. The findings will serve as a guide for the BSP and the industry, potentially leading to the introduction of wholesale CBDCs in the Philippines.”
Among the contenders, Hyperledger Iroha, which underpins Cambodia’s Project Bakong, was a likely choice. Notably, its lead developer, Soramitsu, had previously collaborated with BSP.
The Philippines has previously indicated that it is unlikely to launch a retail CBDC, given the prevalence of digital consumer payments and prior financial inclusion reforms.
In terms of cross-border CBDC initiatives, an IMF report underscored the Philippines’ potential for utilising a CBDC in cross-border payments. While the Philippines initially expressed interest in joining the Singapore multi-CBDC project, Project Dunbar, it appears that the experimental project has concluded. The MBridge Project, another significant Asian cross-border CBDC endeavour, continues to progress and involves central banks from Thailand, Hong Kong, China, and the UAE, with numerous other nations closely observing its developments.
Local banks participating in the Philippines’ Project Agila include BDO Unibank, China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corporation, Union Bank of the Philippines, and Maya Philippines. Financial institutions observing for subsequent phases of the project include Citibank N.A. Manila, China Bank Savings, Wealth Development Bank Corporation, and SeaBank Philippines.