IMF finds wide use of informal channels for forex
AN INITIATIVE to develop the Philippine capital markets has found that many Filipinos still turn to informal channels for foreign exchange transactions.
In a statement on Monday, the International Monetary Fund (IMF) and the Philippine Chamber of Commerce and Industry (PCCI) said they met to draft recommendations on capital market development to the Bangko Sentral ng Pilipinas, which the IMF is advising.
IMF lead financial sector expert Annamaria Kokenyme noted that formal foreign exchange transactions are hindered by regulatory frameworks, documentation requirements and risk management operations, which lead to greater usage of informal channels.
At present, the Philippines is heavily dependent on the informal channels to undertake foreign currency transactions, raising the risk of money laundering.
PCCI President George T. Barcelon said there is difficulty in monitoring the flow of funds when the remittances are not coursed through official channels.
“With (the) issue of dollar remittances, it’s hard really to monitor everything because of the overseas Filipino workers. We all know that the official remittances are about $30 billion,” Mr. Barcelon said.
“Some are coursed through banks and most are through quasi- banking institutions… and sometimes people deliver physical money and it’s hard to trace.”
PCCI Honorary Chairman Edgardo Lacson said the dependence on the informal market is due to the simpler procedures and the lack of documentation.
PCCI Chairman emeritus Alfredo M. Yao also noted that documentary stamps required by the banking system is deterring the development of the oil industry, whose main commodity is globally priced in dollars.
Current law allows corporations to exchange $ 1 million a day without documentation. —