Blockchain: Philippines To Use Its CBDC To Sell Sovereign Bonds On Blockchain

Philippines To Use Its CBDC To Sell Sovereign Bonds On Blockchain

November 21, 2023

Bhushan Akolkar

Senior Journalist

Expertise : Cryptocurrency, Blockchain, Macro Finance

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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The Bureau of the Treasury in the Philippines is considering a collaboration with the central bank to extend the use of digital currency to the sale of government securities.

The Treasury is exploring the benefits of blockchain technology after successfully raising 15 billion pesos ($271 million) through its inaugural tokenized Treasury bonds utilizing the Distributed Ledger Technology Registry.

Leveraging CBDC For Selling Sovereign Bonds

The Bangko Sentral ng Pilipinas has been conducting experiments with central bank digital currency (CBDC) for significant financial transactions, aiming to assess the technology’s advantages, risks, and policy implications.

However, the current distributed ledger technology (DLT) registry, responsible for indicating the securities’ registration location, only covers half of the bond sale process. In an interview with Bloomberg on Monday, Deputy Treasurer Erwin Sta. Ana said:

“We’re testing the capability of the DLT. We are looking to collaborate with the Bangko Sentral in their central bank digital coin program. There’s room for integration between our DLT Registry and the BSP’s CBDC”.

Leveraging the Tokenization Trend

Tokenization is an emerging sector garnering increased attention from various governments and companies. In February, Hong Kong achieved a milestone by selling HK$800 million ($103 million) in inaugural digital green bonds through Goldman Sachs’ GS DAP platform, thus marking the world’s first tokenized green bond issued by a government.

Also, as per Citigroup’s estimates, the tokenization market has the potential to reach $5 trillion by 2030, encompassing various assets such as bonds, property, and private equity.

Adding further, Sta. Ana said that the future sales of Philippine tokenized Treasury bonds might involve larger tenors. “When you start introducing securities you go for the shorter end. As the market matures and as the technology matures, then we can explore the belly of the curve and then later on quite longer tenors,” said Ana.

The recent tokenized Treasury bond deal on Monday could serve as an inspiration for more companies to explore similar ventures. Union Bank of the Philippines set a precedent last year by selling digital bonds and listing them on the nation’s bond exchange. Manila is now considering expanding the issuance of tokenized bonds to encompass retail investors.

“We are just starting and we will look to further take this on the retail side and that’s where we will see most of the impact of those reforms,” Sta. Ana said.