The Bangko Sentral ng Pilipinas said Thursday it selected Hyperledger Fabric as the distributed ledger technology for its wholesale Central Bank Digital Currency pilot Project Agila formerly known as Project CBDCPh.
Project Agila aims to orient the BSP and participating financial institutions on CBDC technology solutions that have the potential to enhance the country’s large-value payment system.
The BSP, with assistance from select financial institutions, decided on DLT as this technology allows data and transactions to be recorded, shared and synchronized across a distributed network of different participants.
This would be a useful mechanism for testing Project Agila’s use case scenario of enabling inter-institutional fund transfers even during off-business hours or when PhilPaSSplus is unavailable.
Hyperledger Fabric was selected through a rigorous process that included system demonstrations, walkthrough procedures and a scoring system, covering the systems’ access, security, 24/7 availability, interoperability and programmability.
CBDCs are a form of digital money denominated in the national unit of account and are direct liabilities of the central bank. Wholesale CBDCs may be issued to commercial banks and other financial institutions to settle interbank payments, securities transactions, and cross-border payments, among others.
“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,” BSP Governor Eli Remolona Jr. said.
Participating financial institutions in the project include BDO Unibank Inc., China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corp., Union Bank of the Philippines and Maya Philippines Inc. Meanwhile, observing financial institutions for succeeding stages are Citibank N. A. Manila, China Bank Savings, Wealth Development Bank Corp. and SeaBank Philippines Inc.
After the selection of the technology for the project, participants will test the use of wholesale CBDC technology alongside PhilPaSSplus in a sandbox environment.
“With the goal of further enhancing the efficiency and safety of the national payment system, we will use learnings from the project as input for crafting BSP’s wholesale CBDC project roadmap,” Remolona said.
The BSP also teamed up with multilateral organizations such as the International Monetary Fund and the Bank for International Settlements Innovation Hub on the technical, risk management and governance aspects of the pilot CBDC project.