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BSP gives banks, financial institutions 6 months to comply with new FX rules

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By Lee C. Chipongian

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said banks, or regulated financial institutions, are given six months to “strictly comply” with the revised rules on foreign exchange (FX) transactions.

BSP Deputy Governor Chuchi G. Fonacier. (Bloomberg Photo)

BSP Deputy Governor Chuchi G. Fonacier. (Bloomberg Photo)

Fonacier, in a circular letter to all banks, reminded BSP-supervised financial institutions (BSFIs) of the time limit to comply, and that they are expected to “adopt sound governance and risk management” in complying with the provisions of Circular No. 1030 (“Amendments to FX Regulations”) which was signed on February 5, by the late BSP Governor Nestor A. Espenilla Jr.

“The BSP enjoins all BSFIs to familiarize themselves and strictly comply with the revised rules and regulations governing FX transactions” as amended by Circular No. 1030 under the Manual of Regulations or the FX Manual, said Fonacier.

“BSFIs are given a transitory period of six months from the effectivity of the said issuance to facilitate the adoption of the new and revised reports that are based on International Monetary Fund Balance of Payments and International Investment Position Manual standards,” she added.

BSP Circular No. 1030 includes provisions in the registration of FX transactions, current account transactions, financial account transactions, inward and outward investments. It also amended the provisions in banks’ FX forwards, swaps and open FX position. The circular included the six-month period for compliance as announced last January.

The most recent of the BSP’s FX policy liberalization basically provided banks with more access to FX resources. It allowed investors more flexibility to manage their investments and cash flows.

The additional FX regulatory reforms, which has been approved by the Monetary Board, will facilitate access to the banking system’s FX resources for legitimate transactions as well as to “further streamline and simplify procedures and documentary requirements for FX transactions.”

The BSP noted that the new FX rules is intended to be “well-calibrated” and done in a “well-sequenced manner”.

“Notwithstanding the further liberalization of FX rules, the BSP maintains its ability to gather current, comparable and comprehensive data on FX transactions and adopts necessary prudential measures to address any perceived emerging concerns,” it added.

Since 2007, the BSP has implemented 10 major FX liberalization moves to relax the rules and this resulted to the expansion of the capital markets.

The latest amendment is aimed at further deepening and developing the capital market in accordance with international practices and standards.

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