The Philippines Welcomes Blockchain, Cautious on Cryptocurrency

The Philippines central bank said it is encouraging the development and application of blockchain in the financial markets, as well as in government institutions, but added it is still cautious about cryptocurrencies.

Speaking during the Philippine Economic Briefing (PEB) in London, Bangko Sentral ng Pilipinas (BSP) Deputy Gov. Diwa Guinigundo said the government is encouraging financial technology (fintech) firms to engage in blockchain development. The PEB is part of a three-day roadshow to brief British investors on the substantial business opportunities in the Philippines’ energy, infrastructure, and tourism sectors and find ways to expand the economic partnership between the Philippines and the United Kingdom.

“We are encouraging fintech firms to engage with the banks on the use of blockchain so delivery of banking services is improved and transaction costs are reduced,” Guinigundo told a panel of British investors. “Blockchain is capable of making banking more efficient, and it allows are the promise of financial inclusion more achievable. We can bank the unbanked.”

He explained the policy board is looking to liberalize the banking system to bring in as many players as possible to make the local banking sector more efficient and competitive.

The BSP, Guinigundo said, has embarked on an ambitious financial inclusion initiative, including encouraging digital assets and blockchain for the efficient delivery of financial services and by providing the opportunity for banks to set up branches even in the remotest areas where there are banks.

“This new technology allows less capitalization,” he said.

However, while the government is ready to accept blockchain for adoption, Guinigundo said the central bank is not yet prepared to embrace cryptocurrency, expressing doubt that digital assets can replace fiat.

“You know, cryptocurrencies lack the requirement to replace fiat,” he added.

Indeed, the BSP launched its National Retail Payment System (NRPS) which aims to promote e-payment transactions in the country. This initiative encourages partnership with fintech firms, even those which utilizes blockchain platforms.

The system aims to migrate micro, small and medium enterprises (MSME), which comprise more than 90 percent of the country’s establishments, from traditional cash transactions into digital methods by enrolling them in NRPS.

Last July, BSP Governor Nestor Espenilla Jr., ordered the creation of a separate unit to monitor blockchain and fintech firms as part of its NRPS. The Financial Technology Sub-Sector (FTSS) under BSP’s Financial Supervision Sector will oversee fintech and blockchain companies raise adoption of digital payments across the country.