BSP pushes for charter changes
THE CENTRAL BANK batted for expanded powers anew to include the authority to secure data even from non-supervised financial players and to regulate all payments systems in the country, the new governor said in calling for changes to its 20-year-old charter.
Bangko Sentral ng Pilipinas ( BSP) Governor Nestor A. Espenilla, Jr. has revived calls to update Republic Act 7653 which allowed the creation of the new central bank in 1993, saying that additional tools and a fresh capital infusion would allow the regulator to have a better handle in steering the local financial markets.
“The economic and financial landscape have changed significantly in scale, scope, reach, and complexity. There is therefore more urgency in having these amendments passed to achieve price stability and other important objectives,” Mr. Espenilla said in a speech at the Philippine Bar Association’s fellowship meeting yesterday.
“We believe that a stronger BSP will translate to a more stable and resilient macroeconomy and a robust financial system that is attractive to investments and businesses to generate employment and inclusive growth.”
Among the changes covered by the BSP’s proposal include the formal recognition of financial stability as the BSP’s mandate, its authority to oversee payments and settlements systems, and the authority to “acquire timely information even from non-supervised institutions,” Mr. Espenilla said just weeks after he assumed the top post on July 3.
Also part of the measure before Congress is the plan to inject fresh capital to bring the amount to P200 billion from the current P50 billion, which the BSP can use for its day-to-day operations and market intervention moves.
Mr. Espenilla said such a request was “not unreasonable,” as it provides the central bank with “flexibility to take appropriate actions” in stabilizing market movements. The BSP sometimes participates in daily currency trading to temper sharp swings of the peso versus the dollar.
The measures remain pending in both houses of Congress. Efforts to enact these amendments trace back to previous Congresses, but have fallen short of passage.
Other legislative reforms sought by the BSP include easing the bank deposit secrecy law, assigning the BSP as the supervising authority for money changers and foreign exchange dealers, enacting a framework for Islamic banking, and the creation of a national identification system that would be used in improving controls versus illicit money.
Mr. Espenilla likewise called for these reforms on the back of a fast- changing environment, particularly with emerging cybersecurity risks and a more demanding client base in terms of efficient financial services.
REGTECH
The central bank chief said it is looking to lay down an “enabling” framework for financial technology, as it also tries to adopt these new digital systems for its regulatory efforts.
Mr. Espenilla said the BSP is testing two artificial intelligencebased platforms for the conduct of its regulatory operations, which include the collection of industry data by way of electronic submissions, as well as chatbots for consumer complaints.
“For example, there are a lot of complaints for a particular financial product. We should be cued that this is a potential problem so that we can then intervene before the problem becomes bigger,” Mr. Espenilla explained, but noted that the pilot run of these internal programs is eyed within the year.