BSP in final leg of ambitious forex reforms

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is finalizing an ambitious foreign exchange (FX) reform package as part of its holistic financial sector reform agenda.

BSP Governor Nestor Espenilla Jr. said in a speech during the annual joint membership meeting of major market stakeholders the objective of the reforms is to deepen the foreign exchange market, increase its efficiency and reduce the cost of doing business.

Espenilla pointed out the reforms include removing prior BSP approval for certain FX transactions, simplifying registration processes, further reducing documentary requirements, and enhancing data capture for effective policy decision-making.

While the idea is to establish a framework that relaxes foreign exchange rules and regulations, he stressed authorized agent banks are responsible and are held accountable for faithfully complying with the rules.

“With these efforts, we hope to encourage FX flows from the parallel market to the formal market. Even as we strengthen regulations over money service businesses to maintain financial integrity and enhance consumer protection, we will streamline FX requirements for the banking system to reduce market fragmentation and increase FX liquidity,” he said.

According to him, the amendments to FX regulations are part of a broader thrust for an organized FX market.

“The intention is to increase transparency, improve price discovery, and increase availability of FX instruments, including hedging products, to improve risk management capabilities of banks and clients,” he added.