The Bangko Sentral ng Pilipinas (BSP) yesterday said the latest set of foreign exchange (FX) reforms are aligned with prevailing market conditions and will further promote an environment conducive to businesses and investments.
Benjamin Diokno, BSP Governor, said the reforms are “in line with the BSP’s commitment to maintain an FX regulatory framework that is responsive to the needs of a dynamic and expanding Philippine economy.”
“While the rules are already liberalized, the BSP is continuously reviewing the FX regulatory framework of the country to ensure that these are aligned with prevailing market conditions and that the general public will have continued access to FX resources of the banking system for legitimate FX transactions,” Diokno said.
The most recent FX reforms were issued under Circular No. 1124 dated August 10, 2021.
The revised rules under said Circular will be effective on September 13, 2021.
Circular No. 1124 aims to promote greater ease in the use of FX resources of the banking system, and further streamline and simplify procedures and documentary requirements for FX transactions by allowing, among others, electronic submission of documents and use of electronic/digital signatures.
Specifically, the BSP decided to permanently adopt the electronic submission of documents and use of e-signatures to facilitate submission by clients of documentary requirements as well as BSP processing of applications.
“This will support e-commerce transactions,” Diokno said.
The BSP will now also allow the sale of FX by banks without prior BSP approval for various FX transactions involving e-commerce market participants to support digital payments and electronic transactions.
“This ensures that our policies are attuned with international and domestic market developments and responsive to the needs of the economy amid the prevalence of e-commerce transactions,” Diokno said.
He said the reforms will also further facilitate trade and non-trade transactions of Philippine residents with non-residents.
“For instance, BSP’s stakeholders will be provided with greater flexibility as they could submit alternative or equivalent documents for FX sale by banks for settlement of trade and non-trade current account transactions,” Diokno said.
The Circular will also further facilitate FX sale to support the National Government’s infrastructure projects. Noting the need for monetary support of dependents of Philippine residents amid the pandemic, the BSP will allow sale of FX by banks for living allowance or medical expenses of dependents abroad, among others.
In addition, BSP will allow funding of the peso deposit account of non-residents with peso receipts relating to trade transactions, foreign loans and investments, among others. This is to facilitate peso transactions of non-residents in the Philippines.
These reforms also intend to facilitate electronic transactions and digital payments by allowing FX purchasers to provide alternative documents for trade and non-trade current account transactions.
“The recent FX reforms are also seen to promote capital market development by allowing funding of peso deposit accounts of non-residents with peso receipts related to loans and investments, among others; and lifting the prior approval requirement for derivatives transactions of non-bank government entities,” Diokno said.
“And as in previous FX reforms, we will continue to engage stakeholders to ensure that the evolving market needs are considered before amendments to FX regulations are made by the BSP,” Diokno said.
As early as the 1990s, the BSP initiated the liberalization of the Philippine FX regulatory framework. This has been pursued more vigorously in 2007.
