The rise of digital currencies and innovative public systems will shape the future of governance, social services and economic development in the Philippines. This was highlighted by experts during a breakout session at the 10th Annual Public Policy Conference (APPC) hosted by the Philippine Institute for Development Studies (PIDS).
Moderated by Dr. Jose Ramon Albert, Senior Research Fellow at PIDS, the session on "Harnessing Data, Digital Currencies, and Innovation in Public Systems" delved into emerging technologies and trends that are enhancing public sector efficiency and citizen participation. The discussion also explored the challenges and opportunities these innovations bring for sustainable development.
Mr. Siddharth Shetty, Chief Technology Officer at Sahamati, shared successful initiatives that have inspired India to explore the next frontier in financial technology with the “Finternet”—a visionary system that grants individuals full control over their financial assets across various sectors. "We are now putting together a community worldwide to think through the underlying technical aspects behind the Finternet and setting up technical labs in different countries to drive adoption," he said.
The “Finternet” framework is designed to be inclusive and universal, leveraging advances in cryptography and tokenization to allow individuals to manage diverse assets seamlessly. By shifting the focus from traditional asset management systems to a more integrated approach, “Finternet” seeks to facilitate participation in the economy while protecting individuals from potential downsides.
Shetty emphasized that while the underlying technology of the “Finternet” is open and universal, governance frameworks must be robust and adaptable to the specific flows of money and assets. By prioritizing activity-based governance over entity-based regulation, the “Finternet” aims to create an equitable digital financial landscape that includes all individuals and businesses. "It's about thinking what’s the next step that each of us can do as part of the private sector or as public authorities to bridge this new world," Shetty stressed.
In the Philippine context, Mr. Mamerto Tangonan, Deputy Governor of the Payments and Currency Management Sector at the Bangko Sentral ng Pilipinas (BSP), provided updates on the country’s progress toward Central Bank Digital Currency (CBDC) development. He outlined BSP’s journey with CBDCs starting 2020, noting its potential benefits, such as cost savings, payment efficiency, and financial inclusion. "The journey towards the future of currency through CBDC demands collective effort and collaboration," Tangonan said.
As part of this effort, the BSP launched “Project Aguila”, a comprehensive initiative to explore the potential of wholesale CBDC, particularly in improving cross-border payments, securities settlement, and liquidity management.
Tangonan acknowledged that Project Aguila is equally a learning journey that aims to build capacity, manage the technology responsibly, and harness its strengths as a modern payment instrument. He also stressed the importance of fostering trust and ensuring the secure management of CBDCs, laying the groundwork for future innovations in the country’s financial system.
Meanwhile, Mr. Jay Fajardo, Executive Director of QBO Innovation Hub, highlighted the need to improve digital payment systems to address both human and technical concerns. “More than 50% of payments nowadays happen digitally, and we’ve advanced significantly in terms of convenience with digital payments, but we still rely on humans in various stages”.
Fajardo stressed the importance of ensuring financial inclusion in creating a stronger and more efficient digital economy. He emphasized the need for continuous improvements in digital infrastructure benefiting both wholesale and retail payments, and resulting to a more accessible and decentralized financial system.
Watch the recording of the breakout session on “Harnessing Data, Digital Currencies, and Innovation in Public Systems” at https://bit.ly/10thappcbor4 or access the full APPC session at https://bit.ly/appc2024. ###
