THE Bangko Sentral ng Pilipinas (BSP) said on Thursday, Dec. 30, 2021 the Monetary Board approved the second phase of amendments to the Foreign Currency Deposit System.
Under the second phase amendments, banks will only have to notify the BSP of their intent to engage in expanded Foreign Currency Deposit Unit (FCDU) operations, the BSP said in a statement.
Previously, banks were required to seek prior approval of the central bank.
“The second phase of the reforms will afford banks the opportunity to perform efficient and flexible liquidity cash management of foreign currency (FX) denominated funds by easing the stringent conditions on lending to Regular Banking Unit (RBU) by the E/FCDU,” BSP Governor Benjamin Diokno said in a statement.
“In view of the liberalized FX regulatory environment, banks are expected to put in place an appropriate risk management system and integrate the same into the overall risk management process to ensure that material risks arising from FX denominated transactions are properly identified, measured, monitored and controlled,” he added.
Expanded coverage
Coverage of the rules were also expanded to include Islamic banks and digital banks to the list of entities authorized to engage in foreign exchange transactions.
The Bangko Sentral ng Pilipinas said the amendment also streamlines related licensing requirements for banks applying for the FCDU authority.
The Bangko Sentral ng Pilipinas said the first phase of the reform was implemented in May 2020. (PR)