The central bank of Philippines, the Bangko Sentral ng Pilipinas, is set to publish a circular on the framework later this month, according to comments by deputy governor Chuchi Fonacier to Philippine Daily Inquirer. The move coincides with developments around the Virtual Banking Act, which some lawmakers hope will pass into domestic law before the end of 2020. The bill has also set a significantly higher minimum capitalization requirement of PHP20 billion ($411.31 million) raised within four years.
The central bank can authorize five digital banks for over five years.
The act would limit the country’s central bank to authorizing just five digital banks over five years. Foreign ownership limits would be increased over current proposals from a maximum of 40% to 70%. Joey Salceda, representative of Albay’s 2nd District in the House of Representatives, said the law was designed to support the emerging digital banking industry, particularly by encouraging expertise worldwide.
Joey Salceda further said that they generally want more foreign participation for openness to foreign equity, especially at the initial stages, since they want to absorb financial technology developed from elsewhere. This is a new industry and an industry where we have limited domestic know-how, so the more we can learn from others, the better, he added.
Central banks across countries explore CBDCs.
Developed economies like the USA and China are exploring central bank digital currencies in the age of innovation. As reported earlier, the Bank for International Settlements revealed that in 2020, worldwide internet searches for CBDCs surpassed searches for Bitcoin and Facebook’s Libra. The People’s Bank of China (PBoC) is currently conducting trials of its national digital currency, dubbed DCEP, in several cities and is all set to launch soon. The PBoC had earlier mentioned that it was only testing the digital yuan for small retail transactions