Metro Manila (CNN Philippines, December 30) — The Bangko Sentral ng Pilipinas has approved amendments to regulations on foreign currency deposit unit (FCDU) transactions to allow more banks leeway in performing them, it said Thursday.
Among the amended regulations are the inclusion of Islamic banks and digital banks among entities allowed to take part in foreign currency (FX) transactions, said the BSP in a statement.
The Monetary Board likewise approved the streamlining of related licensing requirements for banks applying for FCDU authority.
Now, banks only need to notify the BSP of their intent to engage in Expanded/FCDU operations —- unlike before where they need to secure the central bank’s approval.
Still, they are expected to adhere to E/FCDU license standards and requirements, stressed the BSP.
“The new rules also rationalize the prescriptive requirements for certain E/FCDU transactions such as foreign currency derivatives activities and securities transactions following the relevant provisions in the Manual of Regulations for Banks to ensure consistency in the implementation and enforcement of guidelines,” it added.
BSP Governor Benjamin Diokno said the reforms — which are now in their second phase — will allow banks to perform “efficient and flexible” liquidity cash management of FX funds. This will be done by relaxing “stringent” conditions on lending to regular banking units, he added.
“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,” said Diokno.
The BSP approved the first phase of the reforms in May last year.
