BSP chooses technology for digital currency 

The Bangko Sentral ng Pilipinas (BSP) selected Hyperledger Fabric as the distributed ledger technology (DLT) for the piloting of its wholesale “Central Bank Digital Currency” (CBDC) project, according to a report by BusinessMirror.

The initiative, renamed from “Project CBDCPh” to “Project Agila,” aims to orient the BSP and participating financial institutions on digital-currency technology solutions that have the potential to enhance the country’s large-value payment system.

BSP said the DLT 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 (i.e., evenings, weekends and holidays) or when ‘PhilPaSSplus’ is unavailable,” BSP said.

After the selection of the technology for the project, participants will test the use of wholesale CBDC technology alongside PhilPaSSplus—the next-generation Real Time Gross Settlement system—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,” BSP Governor Eli M. Remolona Jr. said.

The central bank said the Hyperledger Fabric technology 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.

“Hyperledger,” a DLT innovation, was first developed by the Linux Foundation Inc. in 2015 as a cross-industry collaboration. Digital Assets Holdings Inc. and IBM Corp. contributed to the project in early 2016 through a product called “Fabric.”

According to the Hyperledger Foundation, the Hyperledger Fabric “is an enterprise-grade, distributed ledger platform that offers modularity and versatility for a broad set of industry use cases. The modular architecture for Hyperledger Fabric accommodates the diversity of enterprise use cases through plug and play components, such as consensus, privacy and membership services.”

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,” Remolona said.

Participating financial institutions in this project are BDO Unibank Inc., China Banking Corp., Land Bank of the Philippines, Maya Philippines Inc., Rizal Commercial Banking Corp., and Union Bank of the Philippines.

Meanwhile, observing financial institutions for succeeding stages are Citibank N. A. Manila, China Bank Savings, Wealth Development Bank Corp., and SeaBank Philippines Inc.

The BSP also collaborated 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.