E-money issuers now subject to liquidity requirements

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has imposed a minimum capital and liquidity requirements on electronic money issuers (EMIs) to promote a safe, efficient and inclusive digital finance ecosystem.

The BSP issued Resolution 122 on Jan. 26 approving the amendments to the pertinent provisions of the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions on the regulations government the issuance of e-money and operations of EMIs.

BSP Governor Felipe Medalla said the amendments aim to equip EMIs with tools to answer the evolving needs and behaviors of consumers and in responding to the existing and emerging risks in the financial sector, such as cybersecurity and money laundering.

“The revised guidelines reaffirm the BSP’s commitment to uphold the welfare of Filipinos by promoting a safe, secure, and inclusive financial system,” Medalla said.

He said the new regulations governing EMIs and operations allow BSP-supervised financial institutions (BSFls) to adopt risk management systems commensurate to their size, risk profile, complexity of operations, and systemic importance.

“This enables BSFIs to provide financial services attuned to the evolving needs and behavior of consumers and supported by safeguards and controls to ensure that risks remain within manageable levels,” the central bank said.

The revised guidelines set out higher liquidity and capital requirements for EMIs with significant outstanding e-money balance and large scale operations, respectively.

EMIs with monthly outstanding e-money balance of at least P100 million are required to maintain liquid assets in trust accounts equivalent to at least 50 percent of their outstanding e-money balance and to cover the remaining balance with placements in bank deposits, government securities, or other liquid assets acceptable to the BSP.

EMIs with outstanding e-money balance below P100 million may continue to comply with the liquidity requirements by holding eligible liquid assets.

Meanwhile, the new rules set out higher minimum capital requirements for EMIs with large-scale operations recognizing the higher risk exposures of said entities.

The issuance defines large-scale EMIs as those with 12-month average value of aggregated inflow and outflow transactions equal to or greater than P25 billion.

Under the guidelines, large-scale EMIs are required to maintain minimum capital of P200 million while the minimum capital requirement for small-scale EMIs is P100 million.

Consistent with the application of the risk-based principle, the BSP lifted the P100,000 monthly aggregate load limit and now allows EMIs to set pre-defined limit and threshold per client category based on the results of their institutional risk assessment and customer due diligence process.

The regulator has given EMIs one year from the effectivity of the revised regulations to comply.

To date, there are 29 EMI-banks and 41 EMI-others registered with the central bank.