for BSP charter change
Atty. Ignacio R. Bunye
in and year out, the Bangko Sentral
ng Pilipinas has been recommending
to Congress proposed amendments to
its 20-year- old charter.
proposed amendments can be grouped
into three categories: a. amendments
that would strengthen BSPs monetary
stability function; b. amendments
that would strengthen BSPs financial
stability function; and c. amendments
which would strengthen BSPs
corporate and financial viability.
usual bills are filed in both houses
at the start of every session of Congress.
The routine committee hearings are
held. But somehow the BSP-proposed
legislative agenda always gets relegated
to the background and never gets past
the Committee stage.
year, BSP officials are a bit more
optimistic. Word from Senate President
Franklin Drilon has been encouraging.
The BSP charter amendment is now reportedly
among the legislative priorities of
the present Congress.
Bangko Sentral ng Pilipinas (BSP)
may be getting plenty of positive
reviews and awards these days for
its remarkable work in our economy,
but this does not mean there is no
longer room for improvement.
challenge is to continue getting better
and to keep in step with the developments
in our globalized economy.
recently held 10th BSP Media Lecture
Series, BSP Deputy Governor Vicente
S. Aquino explained how the BSP can
better perform its constitutional
mandates of promoting and maintaining
monetary and price stability in the
country through the sought-after charter
its corporate and financial viability,
the BSP proposes to institutionalize
an additional capitalization of P150
billion on top of the P50 billion
that the BSP charter provides. Of
the P50 billion, only P40 billion
has been paid in so far.
also calls for a. the restoration
of its tax exemption (a privilege
enjoyed by most central banks); b.
flexibility in establishing adequate
loss allowances and reserve buffers;
and c. enhancements to its credit
proposed provisions aim to offset
BSPs heavy burden (mostly interest
expense) incurred by the BSP as it
tries to keep inflation low and stable.
salient feature of the proposed bill
involves the strengthening of BSPs
monetary stability function.
BSP seeks the restoration of the authority
to obtain data from any private person/entity,
the authority to issue its own negotiable
certificates of indebtedness even
during normal times, and the removal
of thresholds in the growth of monetary
aggregates and credit.
these provisions will enable BSP to
come up with more responsive monetary
policy since it will now have access
to more relevant, reliable, timely,
and comprehensive data on the economy.
its own debt securities, meanwhile,
the BSP will have greater flexibility
in its open market operations.
on monetary aggregates is now given
less weight in analyzing and evaluating
proposed amendments also seek to give
more power to the BSP as the supervisor
and regulator of financial institutions.
hopes to make financial stability
as an official mandate of the BSP
along with monetary stability and
BSPs supervisory authority,
the proposed amendments seek to expand
its jurisdictions to cover other financial
institutions such as money changers
and remittance agents; to grant authority
to BSP to impose sanctions on transfers
and acquisitions of substantial shares
of banks/quasi banks without BSP approval;
to enable a flexible conduct of risk-based
supervision; and to impose stronger
sanctions like the forfeiture of profits
from unauthorized financial transaction.
also seeks to improve its resolution
mechanisms for problematic financial
institutions. BSP suggests the lifting
of the bank secrecy law in aid of
BSP examination activities. Finally,
BSP bats for legal protection for
BSP officials and staff while performing
their official duties.
the magnitude of BSPs responsibilities
in a rapidly evolving economic and
financial landscape, it is about time
that Congress gives more than perfunctory
attention to the amendment of BSPs
My book, Central Banking for Every
Juan and Maria is now available in
main branches of Fully Booked, Power
Books, National Book Store, and University
of the Philippines Press.
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