Developing and upgrading the country’s digital payment system is the priority of the government’s financial managers before engaging in Central Bank Digital Currency (CBDC), Department of Finance (DOF) Secretary Benjamin Diokno told senators on Monday.

A study by the Bangko Sentral ng Pilipinas (BSP) in 2021 to find out the feasibility of digital currency concluded that it is not yet “worthwhile” for the Philippines at the moment.

“Because we have a parallel system, ‘yung (the) PESONet and InstaPay, pagtuunan muna natin ‘yun (let’s focus on that first) before we go into CBDC. ‘Yun ang resulta ng pag-aaral (That was the result of the study),” Diokno said during the DOF budget hearing.

PESONet and InstaPay are electronic funds transfer services that allow account holders to transfer funds in Philippine peso to another account of other participating banks, e-money issuers or mobile money operators.

The twin systems are under the BSP’s National Retail Payment System that aims to increase e-payment transactions.

As of posting time, Diokno and other officials of attached DOF agencies were defending their proposed PHP30.570 billion budget for 2023 before the Committee on Finance chaired by Senator Sonny Angara.

“We will favorably recommend your budget to the plenary,” Angara told DOF officials.

Diokno said other countries tried to engage in CBDC because of the proliferation of digital currencies that are not backed up by their central banks.

He warned that digital currency is dangerous especially if it is not backed up by a central bank.

Lagi pong sinasabi namin, huwag kayong maglalaro diyan kasi (We always say that you should not play with it because) you’ll get burned kasi napaka-speculative po niyan eh (because it is very speculative),” he said.

In May last year, the BSP, then headed by Diokno, initiated an exploratory study for a more collaborative and comprehensive investigation of CBDC’s nature and implications for the country’s financial system.

The national payment system was later assessed which resulted in the identification of relevant users of wholesale CBDC aimed at the enhancement of the payment system, safety, resilience, and efficiency.

Digital currency, also called digital money, electronic money, electronic currency, cryptocurrency or cybercash, is accessible only with computers or mobile phones.

It is more convenient but also susceptible to hacking. (PNA)