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Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

House Bill No. 1998

Introduced by Representative Midy N. Cua
Lone District, Quirino

AN ACT CREATING A BANGKO SENTRAL DIGITAL PESO (BSDP) AS A MEDIUM OF
EXCHANGE OR AS MONEY FOR USE ON ALL DIGITAL MEANS, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The continued development of information technology is driving rapid change in various sectors of
society, including commerce and finance. In recent years, countries all over the world have become
less reliant on physical currency and have initiated their respective efforts to move towards a "cashless"
society.

‘The many conveniences afforded by the digitalization of commerce has led to the increased popularity
of electronic money and digital modes of payment. This was on full display during the height of the
‘COVID-19 pandemic, wherein many face-to-face transactions were replaced by transactions conducted
with the use information technology and digital payments. As the world continues to digitize, sovereign
or central bank-backed digital currencies will be particularly valued for the security and stability it
represents.

‘At present, there is no sovereign digital currency in national circulation. In its a place is a patchwork
of digital payment platforms and electronic money systems regulated by the Bangko Sentral ng
Pilipinas but operated by private entities. This measure is proposed to fill the gap by mandating the
creation, adoption, and perfection of a Bangko Sentral Digital Peso (BSDP).

‘The BSDP is the digital equivalent of the paper peso and possesses all its characteristics and attributes.
It is valid legal tender that can be used to purchase goods and services as well as settle financial
obligations such as debts and taxes. Under this bill, the BSDP will be recognized as the only digital
legal tender in the country. It is risk-free, durable, secure, and portable fiat currency accessible to the
public even as the use of paper money declines and new forms of privately issued digital money become
more widespread.

As a central bank-backed digital currency, the BSDP is in line with the BSP's thrust of promoting.
financial inclusion, It overcomes some of the challenges faced by individuals with limited access to
traditional financial touch points bank branches, automated teller machines (ATMs), and remittance
centers, among others. It reduces transaction costs and enables seamless payments between parties
physically separated from each other. Further, it supports the government's efforts to combat financial
crimes and corruption due to the ability of its underlying technology to record the flow of money.


The proposed bill was first filed by Representative Junie E, Cua of the Lone District of Quirino in the
18th Congress. By refiling this measure, the conversation on the BSDP can continue and hopefully
proceed further. A convenient, accessible, and secure digital currency will enable more transactions,
boost economic growth, and move our country forward,

In view of the foregoing, approval of this measure is earnestly sought.

Lone/District, Quirino


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Republic of the Phi
HOUSE OF REPRES!
Quezon City, Metro Manila

‘TWENTIETH CONGRESS
First Regular Session

House Bill No. 1998

Introduced by Representative Midy N. Cua
Lone District, Quirino

AN ACT CREATING A BANGKO SENTRAL DIGITAL PESO (BSDP) AS A MEDIUM OF
EXCHANGE OR AS MONEY FOR USE ON ALL DIGITAL MEANS, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Short Title. ~ This Act shall be known as “The Bangko Sentral Digital Peso (BSDP) Act.”
Section 2. Declaration of Policy. — It is hereby declared the policy of the State to create, regulate, and

provide legal tender, which can be used as a medium of exchange for the purchase of goods and
services.

Scetion 3. Nature of BSDP. ~ The BSDP is the digital equivalent of the paper peso. All rights,
obligations, attributes, and characteristics accruing to the paper peso shall also accrue to the BSDP.
The BSDP is legal tender, and a valid and legal payment for debts, taxes, goods and services, and the
like

Being a legal tender, the BSDP cannot therefore be denied as a valid mode of payment.

Section 4, Use of Transaction Ledger. ~ The BSDP shall use a transaction ledger system to assure its
authenticity, as security against counterfeiting, and as a guard against double or multiple bookings of a
single transaction. The transaction ledger system is to be called a log chain. Fach newly minted BSDP
will have its own unique log chain, Each log chain will be divisible in synchrony with its mother BSDP
denomination.

The best such log chain technology at the time of minting shall be determined by the Bangko Sentral
ng Pilipinas (BSP). Such technology may be adopted, purchased, or developed in-house by the BSP. In
addition, the BSP may consider the use of peer-to-peer data processing for a part or all the data
processing requirements of BSDP.

Section 5. Limitation on BSDP Retirement. ~ Until the BSP has gained four (4) years of operational
experience, the BSDP in circulation will be retired upon their being received at any bank and with their
log chain showing that they have completed at least twice as many transactions as their paper peso
counterparts

The limitation may be extended by the BSP afier this period, if deemed appropriate by its technical
staff and Governing Board,


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Section 6. Initial Mining. ~ The initial amount to be minted shall be determined by the BSP within one
(1) year from the effectivity of this Act.

Section 7. Condition for Subsequent Minting. — No other minting shall occur for a period of four (4)
years, and only if the BSP ascertains that the BSDP technology is proven secure. The BSP shall define
and publish what "secure" means, in consultation with the Oversight Committee created under Section
15 of this Act.

Section 8. Exclusivity of BSDP. — Only the BSDP shall be recognized as the digital legal tender in the
Philippines

Section 9. Availability of BSDP. — The BSP shall promote the availability of BSDP in all channels.

Section 10. Requirement on Business Establishment, — No business establishment shall be allowed to
have official electronic payment or money transfer system unless denominated in BSDP.

Section 11, Technology to be Used, ~ The BSP shall explore and study the technology of blockchain
and post-blockchain cryptocurrencies to expand its knowledge base, which it will use in deciding which
technology or combination of technologies is suitable for the BSDP. Provided, that a pect-to peer system
will be used to verify the log chain of BSDP.

Section 12. Choice of System. ~ The BSP will choose a system which uses peer-to-peer processing of
the log chain, It shall exert its utmost to leverage existing hardware being used by the other leading
cryptocurrencies.

The BSP may, in complementation and augmentation of peer-to-peer processing, establish its own
hardware centers for the processing of log chain data, provided, that it helps to lower the BSDP's cost.

Section 13. Promotion of BSDP. ~ The BSP shall, for a period of five (5) years, renewable by the
Oversight Committee, promote through television, radio, print media, and online advertising the use
and virtues of the BSDP.

Section 14. Use of International Transaction. - The BSDP shall be allowed and encouraged for
international transactions, even if it involves exchange with other currencies.

Section 15. Congressional Oversight Committee. ~ There is hereby created a Congressional Oversight
Committee to oversee, monitor, and evaluate the implementation of this Act. The Oversight Committee
shall be composed of three (3) members each from the House of Representatives and Senate of the
Philippines. The members of the House shall come from the Committee on Banks and Financial
Intermediaries while the members of the Senate shall come from the Committee on Banks, Financit
Institutions, and Currencies. The Oversight Committee shall be co-chaired by the Chairpersons of the
House Committee on Banks and Financial Intermediaries and the Senate Commuttee on Banks,
Financial Institutions, and Currencies.

Section 16. Separability Clause. — If any provision of this Act is held unconstitutional or invalid, all
other provisions not affected thereby shall remain valid.

Section 17. Repealing Clause. ~ All laws, presidential decrees, executive orders, rules, and regulations
or part thereof, which are inconsistent with this Act or with the rules and regulations issued pursuant
thereto are hereby repealed or modified accordingly.

Section 18. Effectivity. ~ This Act shall take effect fifteen (15) days after its publication in the Official
Gazette or in a newspaper of general circulation.

Approved,