The Bangko Sentral ng Pilipinas (BSP) announced today that the Monetary Board has approved further major liberalization reforms to the FX regulatory framework. This is aligned with the BSP’s thrust to further deepen and develop a robust capital market through a more liberal policy environment, taking into consideration adherence to international practices and standards. The reforms intend to facilitate access to the banking system’s FX resources for legitimate transactions, and further streamline and simplify procedures and documentary requirements for FX transactions. The reforms will give the investors greater flexibility to manage their investments and cash flows.
The BSP clarified that the liberalization thrust is pursued in a
well-calibrated and 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.
The major policy reforms include the following:
- Further liberalized rules on inward investment and associated derivatives transactions by broadening the coverage of inward investment transactions, allowing registration of investments filed beyond the prescriptive period, expanding the definition of eligible banks that can register investments on behalf of BSP, streamlining processes and simplifying documentary requirements, and facilitating sale of FX relating to investments;
- Further relaxed the rules on outward investments and associated derivatives transactions by expanding the coverage of outward investment transactions and lifting the prior BSP approval requirement for purchase of FX beyond the threshold amount, subject only to prior notification to the BSP;
- Allowed the submission of supporting documents through electronic means for: (a) registration of private sector foreign loans/borrowings without public sector guarantee; (b) registration of inward investments; and (c) sale of FX by banks covering various FX transactions; and
- Provided a grace period of one (1) year from effectivity of the implementing Circular to file applications for registration of investments regardless of the date of funding.
The implementing circular will take effect 15 banking days after its publication. A transitory period of six (6) months shall take effect after the effectivity of the circular for the strict implementation of new/revised reports based on International Monetary Fund Balance of Payments and International Investment Position Manual standards.
In closing, the BSP still emphasized that banks are expected to continuously implement safe and sound practices amidst the continuing liberalization of FX rules. Further, the BSP will remain vigilant and ready to act, as necessary, in pursuit of its mandate to maintain price stability, a sound financial system, and a convertible Philippine peso to support a sustained and inclusive growth.