Bangko Sentral to further ease foreign exchange rules

The Philippine central bank seeks to complete a circular this year that would further ease the documentary requirements for foreign exchange (FX) transactions, according to a Monetary Board member.

The market should expect more waves of foreign currency reforms this year, Monetary Board member Anita Linda R. Aquino told an economic forum on Monday.

“The draft circular is already being exposed to the markets, and I am excited to receive the final circular after the industry’s comments are taken into consideration,” she said.

Ms. Aquino said she recommended the lifting of the Bangko Sentral registration document for foreign portfolio investments late last year. Custodian banks did not expect this to happen, but the possibilities are endless, and these processes have “outlived their purpose.”

“To be clear, registration for loans and foreign-directed investments currently will still require the [registration document]. But perhaps, who knows, this may be addressed at some future time,” she added.

The Bangko Sentral registration document covers foreign investments of nonresidents with the central bank or registered banks. Investments need not be registered unless the investor buys foreign currency from banks for conversion to pesos or earnings for remittances.

In January, the BSP released a draft circular on its website that proposed changes to its foreign exchange manual. Under the draft, processing of foreign currency loans, inward investments, and other foreign currency transactions filed with the BSP-International Operations Department will be free of charge.

Stakeholders had until Feb. 2 to comment on the circular.

“Trust me, it will be finished this year,” Ms. Aquino told reporters on the sidelines of the forum.

“I have also outlined a list of FX reforms, one of which is the lifting of the submission of this particular document, the application to purchase FX for certain transactions,” she said. “Rest assured, these reforms are currently being worked on by the BSP team.”

In the draft circular, the central bank revised 15 appendices and annexes of the foreign exchange manual and removed the report on interim peso deposits of registered foreign investments.

Authorized agent banks must submit to the central bank a list of existing and valid registration documents within two weeks.

The central bank will give banks until Sept. 30 to continue reporting the transactions of registered investments using the old report forms, but banks should start preparing their systems and processes to ensure compliance.

The BSP has undertaken various liberalization measures to ease foreign exchange rules to facilitate transactions of banks, public and private companies, small and medium enterprises, overseas Filipinos, and the public.

Since 2007, the Philippine central bank has approved and completed 13 rounds of foreign currency policy liberalization.

In August 2021, the 12th wave of FX reforms allowed the electronic submission of documents and the use of digital signatures to streamline compliance with documentary requirements for foreign exchange transactions.

It also allowed the sale of foreign currency to support government infrastructure development projects and facilitated the funding of peso deposit accounts for foreigners involved in trade transactions.

“Building on this progress, the implementation of the 13th wave of FX reforms in March of 2023 translated pandemic-related relief measures into policy, easing compliance for banks,” Ms. Aquino said.

“These measures include the removal of the notarization requirement for certain supporting documents in both trade and nontrade transactions, as well as the lifting of processing charges for late submissions to the BSP for certain FX-related documents,” she added. — Keisha B. Ta-asan