CBDCs take center stage

How is money transforming in today's rapidly evolving digital economy? The very nature of money is undergoing a historic evolution.

- LITO VILLANUEVA

Central bank digital currencies, once an abstract concept debated in policy discussions and tech think tanks, are now emerging as a tangible, powerful force reshaping financial ecosystems worldwide. CBDCs are not just a "digital version of cash."

They represent a fundamental rethinking of how value moves, how economies function and how financial inclusion can scale like never before. With over 90 percent of the world's central banks exploring or piloting their own digital currencies, including pioneers such as the Bahamas with the Sand Dollar, Nigeria with the eNaira, Sweden with the e-krona and China with the digital yuan, the world is heading toward a CBDC-centered future.

The Philippines and Southeast Asia must not just watch these advancements from the sidelines. We cannot afford to let this opportunity pass us by. The time to lead is now.

CBDC should be the center of our digital finance roadmap. At its core, a CBDC is a sovereign currency in digital form, issued and regulated by a country's central bank.

Unlike cryptocurrencies such as Bitcoin or Ethereum, CBDCs are legal tender, backed by the government, and designed to serve as a medium of exchange, unit of account and store of value. There are two main types of CBDCs, retail CBDCs, which are intended for everyday consumer and business use and wholesale CBDCs, which focus on large-value interbank and institutional transactions. While cryptocurrencies and e-wallets have made impressive strides, CBDCs combine the innovative efficiency of digital assets with the stability and regulatory oversight of central banking.

This is a more balanced, reliable and equal approach, fully backed by the government. CBDCs aim to improve payment efficiency and boost financial inclusion, thus providing a resilient alternative to existing payment systems.