MANILA, Philippines - The Bangko Sentral ng Pilipinas amended yesterday regulations on foreign exchange (FX) transactions for a more efficient and appropriate framework for these deals.
“The continuing review of FX regulations is consistent with the BSP’s commitment to maintain a safe and sound financial system, a stable FX market, and appropriate monetary policy supportive of sustained and inclusive economic growth,” BSP Governor Amando M. Tetangco Jr. said in a statement.
The central bank now allows the sale of foreign currency by banks to residents without prior approval from the BSP as long as this is used to settle payables under “intercompany netting arrangements” that are specifically trade-related.
“The policy is expected to further facilitate legitimate trade transactions and will allow the BSP to better capture data on trade transactions through reporting of gross importations,” the central bank said.
Those belonging to a group of companies will also be allowed to include its group’s payment centers in its beneficiaries of foreign exchange payments or remittances.
“This is intended to hasten settlement of transactions among related entities considering current trends involving the use of a clearing unit for payments/financial transactions such as payment/treasury centers/hubs by members of a group of companies,” the BSP said.
The sale of foreign currency to residents to settle credit card obligations to resident credit card companies will also be permitted, the BSP said.
At the same time, the BSP said non-bank private sector firms will be required to adopt a 75/25 debt-to-equity ratio during the duration of their foreign currency loans.
“This aims to provide better guidance for prospective private sector non-bank borrowers,” the BSP said.
The central bank said it has also expanded the coverage of short-term interbank loans that do not need prior BSP approval, and also simplified guidelines for reporting importations.