Bangko Sentral ng Pilipinas (BSP) has said it will continue addressing the risks brought about by the growing use of digital currencies in the country.
As reported by the Philippines Star, BSP Governor Benjamin Diokno stated that he is not fully convinced about the use of cryptocurrencies in the country, expressing concern over its potential abuse for terrorism financing.
Additionally, the BSP Deputy Governor Diwa Guinigundo spoke of the limitations of cryptocurrencies as a substitute for fiat money, as a medium of exchange, and as a store of value.
“For this reason, game theory dictates possible dysfunction when there is a market breakdown, when everyone may distrust one another. There cannot be a total disregard for a central bank or a third party that provides lender of last resort facility,” the BSP Deputy Governor said.
The warning by the BSP appears to be the result of rising cryptocurrency usage in the Philippines. The PhilStar previously stated that transacting through online currencies in Southeast Asian countries nearly doubled from US$189.18 million in 2017 to US$390.37 million last year, according to data compiled by the central bank’s Technology Risk and Innovation Supervision Department.
In response to the Southeast Asian country’s rapidly increasing reliance on cryptocurrencies, the BSP in February 2017 released a circular authorizing cryptocurrency interchanges to register with the central bank as remittance and transfer companies.
Guinigundo also said that the central bank prefers to employ regulatory sandboxes to keep control of breakthrough technologies, in order to avoid discouraging innovation while mitigating these risks.
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