Amendments to the BSP’s charter will boost its capitalisation and extend its supervisory remit to all financial institutions in the country.
The BSP (Bangko Sentral ng Pilipinas) has announced the signing into law of amendments to its charter by President Rodrigo Duterte, giving the central bank expanded supervisory powers.
The ‘Republic Act No. 11211’ or ‘Act Amending Republic Act No. 7653’, more commonly known as the ‘New Central Bank Act’, embodies a package of reforms that will further align the BSP’s operations with global best practices and improve its corporate viability. The amended charter gives the central bank enhanced capacity for crafting proactive policies amid rising interconnections in the financial markets and the broader economy, according to a BSP statement.
The BSP’s expanded supervisory powers will encompass other categories of financial institutions such as money service businesses, credit granting businesses and payment system operators; and provide the central bank with full flexibility to conduct risk-based supervision of all financial institutions.
“This puts the BSP in a strategic position to address potential risks arising from the linkages of banks and these financial entities,” the statement said.
The new law removes money supply and credit levels as the basis for determining monetary policy, in line with current international trends. It also restores the central bank’s authority to issue debt paper as part of its regular operations.
In addition, the law increases the BSP’s capitalisation to PHP 200 billion (USD 3.83 billion), up from PHP 50 billion, mainly by allowing it to retain its dividends. It will also be exempted from taxes on income derived from its governmental functions.
“The amendments to the BSP Charter are both timely and attuned to a fast-evolving market landscape,” said BSP governor Nestor A. Espenilla Jr, adding that the new charter “provides the central bank with an enhanced legal and regulatory framework in providing a steadying hand to the financial system.”