House OKs bill hiking BSP capital to P200B
The House of Representatives has approved a bill amending the 23-year-old New Central Bank Act to increase the monetary authority’s capital base by four times.
Speaker Feliciano Belmonte Jr. said the approval of House Bill No. 5875 on third and final reading before Congress adjourned on Oct. 9 was a “big step” toward strengthening the Bangko Sentral ng Pilipinas’ ability to face threats to the financial system.
Belmonte, a principal author of the bill, said that since the BSP was formed in 1992, “The economic milieu in the country has changed, globalization has increased the integration of financial markets, and the scope of operations of financial institutions has evolved.”
The bill mandates an increase in the BSP’s capitalization from P50 billion to P200 billion to allow it to cope with an expanding economy and more complex financial system.
The new capital would expand the central bank’s Monetary Stability Fund to help it perform its constitutional mandate, build up reserves to cover foreign exchange fluctuations and issue debt securities.
The fluctuation reserve is to cover losses from exchange rate and price volatility and is to be derived from the net profit before distribution, as provided for under Section 44 of the law. All other reserve funds are to be sourced from surplus.
5-year review
The capitalization is to be subject to review every five years upon joint recommendation by the secretaries of finance and budget and management, and the Monetary Board. The payment of any unpaid subscription and/or increase in capitalization will be appropriated in the national budget.
Other reforms mandated in the bill are the expansion of the central bank’s authority to obtain information from private entities; increased participation of the BSP in setting policy directions in the areas of money, banking and credit; and providing relief to BSP officials and employees from all liabilities and expenses in the performance of their duties.
Under the bill, those who refuse to supply the BSP with the required data or information will be liable for a penalty of one year imprisonment and a fine of P100,000 for individuals and P100,000 to P500,000 for corporations (the jail penalty will apply to directors and officers).
The bill also allows the BSP to acquire shares of any kind or accept them as collateral, but does not authorize it to participate in the ownership or management of any enterprise either directly or indirectly. This prohibition will not apply whenever the Monetary Board by a vote of at least five of its members deems an acquisition or investment to be necessary to qualify, or is required, for membership in international and regional organizations.
