The Bangko Sentral ng Pilipinas (BSP) plans to finish tests on Project Agila this year to enable the transfer of massive funds between institutions using a digital currency and a digital ledger.

BSP Director of Payments Policy and Development Department Atty. Bridget Rose Mesina-Romero said the BSP will proceed with the cybersecurity assessment on the new fund transfer system.

Afterwards, she said, end-to-end testing will be run between the central bank and financial institutions.

Using the BSP-issued digital currency and ledger, Romero said commercial banks and other financial institutions can fulfil cross-border fund transfers, settlement of securities, and intraday liquidity management faster and at a lower cost.

Proof of concept

“We’re already about to conclude our proof of concept. When we launch something, we need to make sure that there will be users and that the banks and the BSP have to know how to manage it and operate it safely,” BSP Deputy Governor Mamerto Tangonan added during a media conference at the BSP Building in Manila on Tuesday.

Romero said the central bank already tested the Distributed Ledger Technology which allows users to view, verify, and update data more easily.

Tokenization feature already tested

Apart from this, she said the BSP already tested the system’s tokenization feature which converts sensitive data into digital entities for safer and faster transactions.

Once the BSP officially activates the system, Tangonan said settlements for securities can be done almost instantly unlike the existing two-day period for equity and three-day period for fixed-income instruments.

“That efficiency will be offered to investors so we can help stimulate capital markets,” he said.

Formerly called the Wholesale Central Bank Digital Currency (CBDC), Project Agila was introduced in 2022.

Cryptocurrencies

During this period, trading of unregulated and private sector-issued cryptocurrencies started growing, while global financial institutions also explored digital currencies as an alternative payment.

“With the distributed ledger technology for the CBDC, institutions can transfer funds anytime across an unlimited number of participating financial institutions. Eventually, we will come up with a baseline assessment to determine the CBDC road map moving forward,” Romero said.

She said participants in the study on Project Agila include big banks, such as BDO Unibank, Land Bank of the Philippines, Rizal Commercial Banking Corp., Chinabank and digital bank Maya.