Digitalization push to lessen demand for cash — BSP

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said yesterday the demand for cash may decline over the coming years amid the digitalization effort of the government, but assured there is adequate supply of currency, particularly crispy banknotes or bills during the Christmas holidays.

BSP Governor Benjamin Diokno said the central bank is now assessing the demand for cash in the country in line with the efforts to shift into a cash-lite from a cash-heavy economy.

“My own prediction is the demand for cash will decline progressively rather than increase,” Diokno told reporters.

The BSP launched the National Retail Payment System (NRPS) in December 2015 as part of efforts to raise the share of cashless transaction to 20 percent by 2020 from only one percent in 2013.

Based on his latest estimate, Diokno said the share of electronic transactions to total transactions has likely reached 30 percent already with the onboarding of government transactions in the NRPS through the Government electronic payment (EGov Pay) facility and the launch of the national QR (quick response) code or QR Ph.

This prompted Diokno to raise the target of cashless transactions to 30 percent from the original target of 20 percent by 2020.

The BSP chief added there is less need for the central bank to print more banknotes as customers are now able to do their transactions through the PESONet and InstaPay.

He said Filipinos could soon ride the tricycle or go to the market using QR codes instead of cash.

In a separate statement, the central bank said it continues to foster an environment conducive to a cash-lite economy.

“This is in view of an evolving global market landscape that takes into account the efficiencies brought about by advances in electronic payment systems and the potential of technology in enhancing financial inclusion,” the BSP said.

It assured the public that there is adequate supply of currency in line with the seasonal demand for fresh banknotes during the Christmas season.

According to the BSP, the country’s currency supply also remains sufficient to meet the needs of a growing economy.

Similar to the practice of other central banks that print their own currency, the BSP partially outsources the production of banknotes to meet surges in currency demand under domestic procurement regulations or international competitive bidding processes.

The BSP continuously invests in and upgrades its capacity for coin and banknote production to further increase its agility in meeting the country’s currency requirements. It is establishing a larger currency production facility in New Clark City in Tarlac.