The Philippines’ central bank completes Project Agila trial, testing wholesale CBDC potential to enhance interbank payments, financial stability, and innovation.
The Bangko Sentral ng Pilipinas (BSP) has concluded testing for Project Agila, a proof-of-concept for a wholesale central bank digital currency (CBDC). This announcement came on Thursday, December 5. Project Agila will improve the interbank payment system so that one FI can transfer money to another at any time, including late in the evening, during the weekends, or on holidays. These transactions are made possible by distributed ledger open-source technology and the Oracle Cloud Infrastructure.
The testing phase was well covered with functional, performance, security, exploratory, end to end and programmability testing. This approach made it possible to ensure that all major parts of the system had been assessed. Further, the interaction with the participating FIs was critical to the success of the project. In addition, it contained useful data on the potential of wholesale CBDCs to enhance the financial system.
Project Agila Paves the Way for Philippines’ CBDC Future
BSP Governor Eli M. Remolona, Jr. highlighted the benefits of wholesale CBDCs, including improved liquidity management and reduced settlement risks. Consequently, these measures are expected to enhance overall financial stability. He mentioned that the report on Project Agila’s CBDC pilot would be valuable for future planning. Further, this data will guide the BSP’s decisions on using the currency going forward.
CBDCs are the digital forms of fiat money, created and managed by the country’s central bank. While the retail CBDCs are in circulation for the customers, the wholesale CBDCs are for the commercial banks and other institutions. They may be used for interbank operations, securities trading, and international transfers of payments. This makes them a useful resource for the enhancement of the velocity of large-value transaction processes.
Project Agila is a pilot test to find out whether CBDC can improve the country’s payment system. The findings will help the BSP in assessing the sustained rollout of wholesale CBDCs. This trial is consistent with other central banks around the world that are using digital currencies to transform the financial sector.
Lastly, the culmination of Project Agila can be considered a milestone for the BSP. It demonstrates that the central bank has been committed to promoting advanced technologies to the financial system. This could pave the way for better, safer, and more advanced payment systems in the Philippines in the future. However, the next step for the BSP will be to leverage the findings of this study to inform the next steps on CBDC.
