BSP Selects Hyperledger for Pilot PH CBDC Project

BSP Selects Hyperledger for Pilot PH CBDC Project

Time Stamp: September 7, 2023 2:13 AM
BSP Selects Hyperledger for Pilot PH CBDC Project PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Key Points:

  • Bangko Sentral ng Pilipinas (BSP) selects Hyperledger Fabric as the technology backbone for Project Agila, its pilot wholesale Central Bank Digital Currency (CBDC) initiative.
  • The project aims to assess the potential of CBDC technology in enhancing the Philippines’ large-value payment systems.
  • Project Agila involves multiple local financial institutions and receives technical support from international organizations.
  • The goal is to better understand the technology’s capacity for enabling inter-institutional fund transfers even during off-business hours.

The Bangko Sentral ng Pilipinas (BSP) announced today that it has selected Hyperledger Fabric as the Distributed Ledger Technology (DLT) for its wholesale Central Bank Digital Currency (CBDC) pilot, dubbed Project Agila.

Previously known as Project CBDCPh, Project Agila aims to orient the BSP and its partner financial institutions toward potential CBDC technology solutions, such as improving the efficiency and security of large-value payments in the country.

(Read more: BDO Joins CBDC Pilot Study for US – PH Remittance)

Why DLT and Hyperledger Fabric?

With the collaboration of selected financial institutions, the BSP chose DLT for its capability to record, share, and synchronize data and transactions across a distributed network of participants. This technology will be instrumental in testing Project Agila’s specific use case—enabling inter-institutional fund transfers even during off-business hours or when PhilPaSSplus is unavailable.

Hyperledger Fabric was chosen through an exhaustive evaluation process that included system demos, walkthrough procedures, and a scoring system based on various metrics like access, security, 24/7 availability, interoperability, and programmability.

Curiously, the BSP did not mention “blockchain” in its press release and referred to Hyperledger as a DLT. Blockchain is a form of distributed ledger technology. Hyperledger Foundation calls Hyperledger a blockchain in its website.

(Read more: Is CBDC a Step Back? Philippine Crypto Community Shares Concerns and Insights)

The Role of CBDCs

CBDCs are a digital form of a country’s national currency and are considered a direct liability of the central bank. In the wholesale format, CBDCs can be used by commercial banks and other financial institutions for settling interbank payments, securities transactions, and even cross-border payments.

Future Prospects and International Collaboration

“After the completion of Project Agila, participants should have a more profound understanding of CBDC technology. The assessment results will serve as a guide for the BSP and the financial industry on the potential rollout of wholesale CBDCs in the Philippines.”

Eli M. Remolona, Jr., Governor, Bangko Sentral ng Pilipinas

Participants in the project include major local banks such as BDO Unibank, Inc., China Banking Corp., Land Bank of the Philippines, Rizal Commercial Banking Corporation, Union Bank of the Philippines, and fintech firm Maya Philippines, Inc. Observing financial institutions for future phases include Citibank N. A. Manila, China Bank Savings, Wealth Development Bank Corporation, and SeaBank Philippines, Inc.

The BSP said it is also working closely with international organizations like the International Monetary Fund and the Bank for International Settlements Innovation Hub to ensure the pilot project adheres to global standards in technical, risk management, and governance aspects.

(Read more: Finance Chief Diokno: This is Not the Right Time for CBDCs)

Next Steps

Following the technology selection, the project participants will test the application of wholesale CBDC technology in a sandbox environment alongside the existing PhilPaSSplus system.

“With the goal of further enhancing the national payment system’s efficiency and safety, insights from Project Agila will be used in formulating BSP’s wholesale CBDC project roadmap.”

Eli M. Remolona, Jr., Governor, Bangko Sentral ng Pilipinas

This article is published on BitPinas: BSP Selects Hyperledger Fabric as Blockchain for Pilot CBDC Project

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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