Edwin Bautista, president and chief executive of UnionBank of the Philippines, has forecast that the coronavirus outbreak will drive banks to shift towards digital currencies, leaving physical cash behind.
As Euromoney reported on April 3, Bautista noted that the pandemic provoked a heightened demand in online banking services, pushing banks to revise their digitization strategy. “Certainly, this pandemic amplifies the need for all banks to go digital now,” Bautista said.
Going further, the exec projected the beginning of the end of hard cash, especially if central banks fail to deliver notes and coins to banks and automated teller machines. Bautista stated:
“One key realization here is that the longer the disruption, the more tenuous the traditional cash supply chain becomes. Thus I expect that banks will be more open to testing, developing and deploying digital cash and currencies, QR codes and maybe even cryptocurrencies and digital tokens.”
“The crisis will fast track the shift towards digital,” which “represents a tremendous new opportunity for banking,” according to Bautista.
UnionBank’s experiments with blockchain
UnionBank has indeed demonstrated a proactive approach to blockchain-related developments. Last July, the bank launched a payments-focused stablecoin pegged to the Philippine peso. The coin, dubbed PHX, is designed to function as “a stable store of value, medium of exchange and is a programmable token with self-executing logic.”
That same month, UnionBank successfully piloted a blockchain-based cross-border remittance from the Philippines to Singapore. The project eventually aims to provide millions of unbanked Filipinos with the ability to use financial services by connecting rural banks to the country’s main financial network.
Meanwhile, other world banks continue to advance the development of their own digital currencies. The Bank of France officially launched an experimental program to test the integration of a central bank digital currency (CBDC) for interbank settlements, while the Bahamas announced plans to adopt a CBDC no later than 2020.