BSP further eases rules on forex transactions

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has introduced new reforms to further liberalize rules on foreign exchange (FX) transactions in the country.

In a statement, the BSP said it has approved additional reforms to facilitate access to the banking system’s FX resources, and to further streamline and simplify procedures and documentary requirements for FX transactions.

The BSP said the measures are expected to give investors greater flexibility to manage their investments and cash flows.

“This is aligned with the BSP’s thrust to further deepen and develop a robust capital market through a more liberal policy environment, taking into consideration adherence to international practices and standards,” the central bank said.

Among the reforms introduced by the BSP include more liberalized rules on inward investment and associated derivatives transactions.

The new rules allow the registration of investments filed beyond the prescriptive period, expand the definition of eligible banks that can register investments on behalf of the BSP, streamline processes and simplify documentary requirements, and facilitate sale of FX relating to investments.

The BSP also further relaxed the rules on outward investments and associated derivatives transactions by expanding their coverage and lifting the BSP approval requirement for the purchase of FX beyond the threshold amount, subject only to prior notification to the BSP.

Furthermore, the central bank allowed the submission of supporting documents through electronic means for the registration of private sector foreign loans without public sector guarantee, the registration of inward investments, and sale of FX by banks covering various FX transactions.

Lastly, the BSP provided a grace period of one year from the effectivity of the circular to file applications for registration of investments, regardless of the date of funding.

The implementing circular will take effect 15 banking days after its publication. A transitory period of six months will take effect after the circular’s effectivity for the strict implementation of new reports based on International Monetary Fund balance of payments and international investment position manual standards.

“The BSP still emphasized that banks are expected to continuously implement safe and sound practices amidst the continuing liberalization of FX rules.” the central bank said.

“Further, the BSP will remain vigilant and ready to act, as necessary, in pursuit of its mandate to maintain price stability, a sound financial system, and a convertible Philippine peso to support a sustained and inclusive growth,” it said.

The BSP also clarified that the liberalization thrust for FX transactions is being pursued in a “well-calibrated and well-sequenced’ manner.