The Bangko Sentral ng Pilipinas (BSP) has directed banks to be more proactive in helping in the circulation of coins within the economy, reminding them that such a task is part of their financial intermediary role.
The directive came amid observations that coins, which the BSP said are important in aiding in the smooth flow of commercial transactions, are not being properly circulated within the economy.
The BSP said it is often asked to mint more coins due to perceived scarcity, but central bank officials said there should be enough coins within the economy because it has been minting enough.
They said the problem lies in the habit of many individuals to leave coins in drawers, piggy banks, or other places, and to carry only bills.
According to the BSP, banks will be able to address the coin problem by making it a habit to accept these from their clients on one hand and to use these in their transactions on the other.
“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, the sole issuer of Philippine currency, by accepting without handling fees or charges, non-mutilated coins for deposit from the public, regardless of amount,” the BSP said in Circular Letter 2011-059 addressed to banks.
“Furthermore, banks are directed to re-circulate such coins received from the depositing public in the course of their business to the economy,” the BSP also said in the letter.
Central bank officials said coins play not only the role of aiding in smooth commercial transactions, but also in keeping inflation manageable.
Officials explain that without coins, prices of goods may increase. For instance, a consumer purchasing a product worth P18 may be forced to pay P20 in the absence of coins, thereby effectively raising the cost of the said product.
Besides asking banks to help in the circulation of coins within the economy, the BSP likewise directed them to help in the fulfillment of the “Clean Note Policy.”