BSP flags risks in removing P500, P1K bills from circulation

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said the proposal to demonetize the P1,000 bill is not that simple, warning that such a move could do more harm than good.

Amid the corruption scandal involving flood control projects, BSP Governor Eli Remolona Jr. told reporters that the central bank is studying the proposal, but noted the negative experiences of other countries with similar measures.

“The P1,000 bill is widely used. For a small inconvenience to contractors, you’re going to make life difficult for many people. But we’re still studying it. We haven’t decided yet,” he said.

Remolona called it a tantalizing proposal, but emphasized that it is not a simple issue, comparing it to “cutting off one’s nose to spite one’s face,” and warning that it could cause more damage.

Former finance secretary Cesar Purisima floated the idea of demonetizing P1,000 and P500 bills to make it harder for corrupt officials to conceal and transport illicit funds by raising logistical barriers.

Last September, sacked public works engineer Brice Hernandez earlier told the Senate Blue Ribbon committee that about seven vans were used to deliver P1 billion in cash to a congressman. The panel is probing anomalous flood control projects nationwide.

Remolona added that the cap on withdrawals to P500,000 is deemed effective despite complaints, noting that the central bank continues to listen to concerns while maintaining that it remains a sound policy.

“So we’re looking at that to try to enhance it, making it easier for us to connect the dots. Essentially, we use it to link one bank account to many, or many accounts to one—patterns like that,” the BSP chief added.

In explaining the cap, Remolona said that banks are required to report all transactions amounting to P500,000 or more, whether in cash or not, as this serves as the threshold for cash transactions.

He added that banks also submit suspicious transaction reports, which provide detailed information on the source of funds and assess whether the amount is consistent with the individual’s income.

Last week, the Anti-Money Laundering Council announced that it had secured a sixth freeze order from the Court of Appeals, covering assets linked to the alleged flood control scam, which includes 39 bank accounts, four insurance policies, and 59 real estate properties.