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BSP Launches Real Time Payment Settlement System

12.12.2002

The Bangko Sentral ng Pilipinas (BSP) marks a milestone today with the formal launching of a real-time payments infrastructure system aligned with those in other countries. Named Philippine Payment System or PhilPaSS, it is part of BSP’s continuing program to develop a stable and competitive Philippine banking system.

BSP Governor Rafael B. Buenaventura said that parallel to providing a modern banking infrastructure, BSP has been instituting major reforms in financial supervision and regulation to strengthen the local banking system. This includes regulatory changes to improve and promote sound risk management.

“Additionally, with PhilPaSS, systemic risk is minimized as real-time high value payments between banks are made using their deposit accounts with BSP. The system allows BSP to monitor liquidity positions of participating banks throughout the day on a transaction-by-transaction basis, so settlements are made only when banks have sufficient funds.”

Based on a soft launch which started last November 22, PhilPaSS has been averaging P100 billion a day from settlements of participating universal and commercial banks as well as a number of thrift banks. The Governor added that by September next year, PhilPaSS transactions will include bank settlements for government securities issued by the Bureau of Treasury. In the future, PhilPaSS may also be linked with the Philippine Stock Exchange for real-time settlement of stock transactions using the Delivery versus Payment mode.

To ensure the system’s smooth and uninterrupted operation, BSP has set up mirror backups for PhilPaSS, the Governor added.

BSP’s PhilPaSS uses the Central Accounting System, the RTGS solution of UK-based Logica which won the international competitive bidding for the project. Deputy Governor Armando Suratos who heads the BSP Computerization Steering Committee said the contract price is $1.3 million, inclusive of training programs for participating commercial banks. Logica is the world leader in standard RTGS systems and counts the European Central Bank among its clients.

DG Suratos explained that while BSP had been using an internally developed interbank payment system that performs satisfactorily, the system lacked a number of payment features that can help strengthen the banking sector further. This includes real-time transaction processing, extensive transaction queue management and a very secure message transport facility. “Rather than build these features into the existing system and include other enhancements which a world-class payment system periodically require, BSP decided to secure a reputable payment system package,” he explained.

He added that banks with sufficient funds are able to make final and irrevocable settlements through PhilPaSS within one to five seconds. However, if the bank does not have sufficient funds, its order for fund transfer is queued until such time full payment is covered.

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