IMF urges BSP to refine digital currency roadmap

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) should refine its roadmap for a wholesale central bank digital currency (CBDC) by setting clearer policy goals, legal safeguards and success metrics before moving to a more advanced experimentation, the International Monetary Fund said.

In a technical assistance report, the IMF said the BSP should continue studying whether a wholesale CBDC could help address inefficiencies in the country’s payment and capital market infrastructure, particularly in the settlement of tokenized government bonds and cross-border payments.

“The BSP should continuously refine the preliminary roadmap based on feedback from various sources,” the IMF said. “This iterative process will help clarify objectives, foster collaboration, effectively manage resources and ensure timely achievements of the outcomes.”

A wholesale CBDC is a digital form of central bank money designed for use by financial institutions, unlike retail CBDCs which are intended for the general public.

The IMF said the BSP’s roadmap should follow a multi-phase approach that starts with resource allocation, alignment of policy goals, continuous stakeholder engagement and a suitability assessment. These should be followed by research and experimentation for the two priority use cases.

The BSP has been exploring CBDCs since 2020 and started pursuing a wholesale CBDC prototype in 2022 under Project Agila. The first sandbox tested wholesale CBDC for interbank transfers and round-the-clock operations using distributed ledger technology, which also allowed the issuance of tokenized securities.

The IMF report was based on a technical assistance mission held from Nov. 26 to Dec. 4, 2024. It involved stakeholder workshops with nine financial institutions under Project Agila, the Bankers Association of the Philippines, the Securities and Exchange Commission, the Bureau of the Treasury and key financial market infrastructure players.

Participants flagged several pain points in the wholesale payment landscape, including limited settlement time, fragmented payment systems, high costs, cross-border payment inefficiencies and the need to deepen the capital market.

However, the IMF cautioned that a wholesale CBDC should not be seen as a cure-all.

“This does not suggest wholesale CBDC as a more effective solution than alternatives, nor could it solely solve all the identified challenges,” the IMF said. “The BSP should continue to pursue alternative solutions to address those challenges while exploring wholesale CBDC use cases.”

For tokenized government bonds, the IMF said the BSP should work closely with the Treasury and other stakeholders to assess whether wholesale CBDC can serve as an efficient tokenized cash leg for securities settlement.

For cross-border payments, the IMF said the BSP should first identify suitable corridors, potential partner countries and the legal, technological and macro-financial risks before testing wholesale CBDC transactions across jurisdictions.

Moving forward, the IMF said the BSP should establish key performance indicators, “go/no go decision points” and success metrics for each use case. It also urged the central bank to strengthen cybersecurity, operational resilience and the legal framework for wholesale CBDC experimentation.