BSP eases rules on foreign exchange

 

By Rose de la Cruz

 

The Bangko Sentral ng Pilipinas announced Friday that it had further relaxed some rules on foreign exchange to further open up the economy through a more liberal policy environment.

 

In a press release, the BSP said the reforms aim to promote greater ease in the use of FX resources of the banking system for legitimate needs by relaxing further FX rules and streamlining procedures and requirements.

 

BSP Governor Nestor Espenilla said this latest thrust represents the BSP’s goal to ensure greater and ease of access to FX resources in order to further support economic activities.

 

He added that this was also done with due recognition to the continuing volatility in the external financial markets.

 

The new policy reforms include the following: I) The lifting of the prior BSP approval requirement for purely private sector loans (that is, those without guarantee from/exposure of any public sector entity), such that these loans now only need to be registered with the BSP to allow use of banking system resources for loan payments.

 

Requirements to support applications for registration and purchase of FX from the banking system were also substantially trimmed down, and the form of documents liberalized, including allowing the use of scanned Application to Purchase FX form.

 

The revised rules aim to further facilitate financing of critical and projects and activities that can contribute to a more vibrant business climate conducive to growth.

 

2) The opening of a temporary window for six months during which purely private sector loans/borrowings obtained without the required BSP approval requirement and are recorded in the obligor's books as of the date of the implementing circular can be applied for registration following the guidelines set for the purpose.

 

The BSP registration of these accounts will qualify the outstanding balances of the obligations to be paid on scheduled due dates using FX resources of the banking system.

 

Before, these loans can only be settled with the borrower's own FX or with fund sourced outside the banking system.

 

The initiative is intended to further widen the coverage of the BSP's records on the country's external obligations to support policy review and formulation, analysis and statistical needs.

 

The implementing circulars will take effect on January 15, 2018.

 

The Governor emphasized that even as the rules are further liberalized, banks are expected to continue to adopt safe and sound practices in their operations.

 

 

This liberalization move is expected to further strengthen BSP's database and its ability to adopt timely and necessary prudential measures to address any perceived emerging concerns.

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