Foreign exchange rules further liberalized

FOREIGN exchange (FX) rules have been further liberalized in a bid to ensure increased access to funds that will help support economic activities, the Bangko Sentral ng Pilipinas (BSP) announced on Friday

The requirement of prior central bank approval for purely private sector loans will be lifted starting January 15 next year and “these loans now only need to be registered with the BSP to allow use of banking system resources for loan payments,” the central bank said in a statement.

Requirements for registration applications and the purchase of foreign exchange were also substantially trimmed and the use of scanned documents was also allowed.

“The revised rules aim to further fa projects and activities that can contrib- ute to a more vibrant business climate conducive to growth,” the Bangko Sentral said.

A six-month window, meanwhile, was opened for registration applications of purely private sector borrowings obtained without the required BSP approval and recorded in the obligor’s books as of the date of the implementing circular.

BSP registration of these accounts will allow the outstanding balances to be paid using the foreign exchange resources of the entire banking industry instead of just the borrower’s own FX or funds sourced outside the system.

“The initiative is intended to further widen the coverage of the BSP’s records on the country’s external obligations to support policy review and formulation, analysis and statistical needs,” the

central bank said.

Central bank Governor Nestor Espenilla Jr. said the revised rules were in line with the BSP’s thrust to further open up the economy through a more liberal policy environment.

“The reforms aim to promote greater ease in the use of the FX resources of the banking system for legitimate needs by further relaxing FX rules and further streamlining of procedures and requirements,” he said.

The move was also done with due recognition of continuing volatility in external financial markets, Espenilla added.

The Bangko Sentral chief emphasized that banks were expected to continue adopting safe and sound practices in their operations.

“This liberalization move is expected to further strengthen BSP’s database and its ability to adopt timely and necessary prudential measures to address any perceived emerging concerns,” he added.