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The Bangko Sentral ng Pilipinas (BSP) today unveiled a package of liberalization measures for the foreign exchange market, raising the amount the individuals or corporations can buy from local banks without the need for supporting documentation.
The measures are an effort to attract more clients to transact with banks and away from the loosely regulated dollar black market—a policy offshoot of the $81-million Bangladeshi Bank cyberheist and the ensuing money laundering effort that used the Rizal Commercial Banking Corp. and money changer Philrem Service Corp.
In a statement, BSP Gov. Amando M. Tetangco Jr. said that Filipino individuals can now buy as much as $500,000 from local banks without need for supporting documentation other than a pro-forma application to purchase the foreign exchange.
Local firms, meanwhile can buy as much as $1 million from banks under the same no-documentation-required scheme.
Previous to this, both individual and corporate buyers could only buy $120,000 from banks on a no-questions-asked basis.
“This policy aims to enhance and further facilitate access to FX of both individuals and corporates for legitimate non-trade current account transactions,” the central bank said.
Tetangco explained that the measures were part of “continuing efforts to keep regulations appropriate for the changing needs of the Philippine economy and following the thrust towards greater openness in view of the country’s increasing integration with global markets.”
At the same time, the central bank also raised the cap on the amount of legal tender that travelers may take out or bring into the country from the old amount of P10,000 to P50,000.
“This intends to provide greater convenience to travelers to and from the Philippines, and allow settlement of obligations in jurisdictions outside the Philippines where the Philippine peso is accepted as a currency of settlement,” BSP said.
The Monetary Board also approved a measure allowing Filipinos to deposit into their foreign currency accounts the dollars they bought from local banks, and for them to remit these funds to parties overseas—a practice previously prohibited as part of old currency control measures.
“This shall provide residents with greater flexibility in managing their cash flows as well as provide greater ease in transacting in foreign exchange,” BSP said.
Also, banks and their foreign exchange units can now sell dollars to Filipinos meant for payment for their dollar obligations to other Filipinos, another practice that was previously prohibited by the central bank.
“This measure will facilitate payment by residents of obligations to their resident counter-parties and allow further diversification of residents’ investments,” it said.
Finally, regulators scrapped the old requirement of first getting BSP approval and registration requirements for private sector loans to be obtained from banks’ foreign currency deposit units, “in line with BSP’s thrust to facilitate access of the private sector to bank financing.”
The implementing circular for these policies will be issued to take effect on Sept. 15.
“Notwithstanding the liberalized rules, banks are expected to continue to adopt safe and sound practices in their foreign exchange transactions and dealings with clients or other counter-parties,” Tetangco said. “The BSP, for its part, will remain vigilant and stand ready to act to keep the foreign exchange market stable.”
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