Businessworld (1) reports that the Philippine Central Bank, Bangko Sentral ng Pilipinas (BSP) and commercial banks are looking into blockchain technology as a solution to expedite payment and remittance services in the Philippines.
BSP Governor, Nestor A Espenilla, Jr said the central bank was studying how to adapt the technology for traditional banking and wire transfers.
Addressing the Association of Philippine Correspondent Bank Officers at the annual convention in Palawan, Mr Espenilla said, :The BSP is working closely with market innovators and industry players to explore tie-ups of correspondent banks with DLT providers. We believe that collaboration and strengthening partnerships with other fintech players is a way to boost digital capabilities of correspondent banks.”
Mr Espenilla said that new customer solutions through efficient service operations were necessary to grow markets in a competitive environment.
Benefits of blockchain
With correspondent banks facilitating the processing of remittances and other fund transfers on behalf of financial firms, Mr Espenilla said that technology-based solution providers suggested that blockchain could support correspondent bank issues.
According to the central bank governor, providers could assist with enabling better risk management, reducing costs and providing an alternative payment platform, especially for low value payments.
Additionally, Mr Espenilla said that monetary authorities have also been considering central bank-issue digital currencies in terms of their potential impact on bank credit and the country’s entire financial system.
The governor said that the BSP has approved a pilot project which aims to create a real-time remittance facility with the need for the intermediary function of the correspondent banks.
Businessworld reported that Mr Espenilla included that the Bankers Association of the Philippines is creating its own programme to use IDs using blockchain.
The central bank supports the concept of migrating to digital transactions, regarding this as an effective vehicle for including more members of the population in the formal financial system.
With smartphone penetration and internet access reaching over half the population, digital transactions are becoming a more viable option.
The BSP said that digitizing payment and remittance transactions would play a pivotal role in facilitating financial inclusion, opening the way to greater access and reducing transaction costs.