BSP explains why coins are missing

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has tagged video game machines, karaoke machines, automated machines that dispense water or coffee, contributions in churches, as well as the illegal numbers game or jueteng as the major cause of the artificial shortage of coins in the financial system.

BSP officer-in-charge Diwa Guinigundo said coins used as tokens for video games, karaoke machines, vending machines as well as the collections of churches and jueteng operations are not recirculated in the system, resulting to a supply shortage.

“It is not the amount of coins in the system, the recirculation of coins is the problem,” Guinigundo explained.

According to him, only about 10 percent of the 18.9 billion pieces of coins are being recirculated in the system.

Data showed that there are about 18.9 billion pieces of coins worth P18.9 billion in circulation denominated in P10, P5, P1 as well as 25 centavos, 10 centavos, and five centavos. This translates to about 198 pieces of coins for each of the 94 million Filipinos.

In other countries, he said the number of coin per person is less than 100 pieces.

The BSP official also cited the practice of Filipinos to save their coins in piggy banks or even keep them in their drawers inside their houses and offices.

Earlier, the BSP reminded banks operating in the Philippines to strictly comply with the central bank’s campaign to optimize the circulation of fit banknotes and coins.

BSP Deputy Governor Nestor Espenilla Jr. issued Circular Letter 2011 - 059 directing banks to conduct periodic compliance testing to cover their compliance with the Clean Note Policy and Coin Recirculation Program.

“In order to ensure that banks comply with the Clean Note Policy and Coin Recirculation Program, banks are required to incorporate measures on the implementation thereof in their compliance program,” Espenilla stated in the circular dated Aug. 12.

The BSP is mandated by Republic Act 7553 or the The New Central Bank Act of 1993 to issue currency and regulate as well as manage the circulation of currency.

Espenilla pointed out that the central bank has mandated banks to accept unfit Philippine currency notes and coins from the depositing public and observe the expeditious withdrawal thereof from circulation as well as implement the Clean Note Policy under Circular 61 dated January 1995.

He added that banks are also required to arrange direct exchange of their accumulated excess fit currency notes or coins with other banks to optimize circulation of said notes or coins under Memorandum 2OO7-O27 dated September 2OO7.

Likewise, Espenilla also encouraged banks to perform their duties as authorized agent banks of the BSP in view of the limited circulation of Philippine coins in the economy.

“In view of the limited circulation of Philippine coins in the economy, banks are enjoined to perform their duties as authorized agent banks of the BSP, as sole issuer of Philippine currency, by accepting without handling fees or charges, non-mutilated coins for deposit from the public, regardless of amount,” he added.

According to him, banks were also directed to re-circulate the coins received from the depositing public in the course of their business to the economy.

Latest data from the BSP showed that currency in circulation as of May 31 consisted of 1.959 billion pieces of banknotes worth P520.739 billion and 16.796 billion pieces of coins worth P18.678 billion.