MANILA, Philippines—The country’s central bank should be enjoying a capital four times bigger than the current P50 billion so it can respond better to global challenges, said Senate President Franklin Drilon.
Drilon has filed Senate Bill No. 1865 seeking to increase the capitalization of the Bangko Sentral ng Pilipinas (BSP) to P200 billion, among other amendments to its charter.
The additional capitalization and other amendments will boost the BSP’s capability to protect depositors’ savings, ensuring smooth transactions in the financial market and increasing its own corporate viability, he said.
Drilon said the BSP charter needs to be amended so that it remains effective in providing policy directions in such areas as money, banking and credit, as well as in overseeing the financial system.
“We have to support the BSP in its constitutional mandate of ensuring a competitive, robust and inclusive economy,” he said in a statement.
Drilon proposed that the government shoulder the P150-billion additional capitalization in three consecutive annual installments.
The BSP’s main goal is to maintain price stability “conducive to a balanced and sustainable economic growth,” as well as preserve monetary stability.
Its functions include implementing a monetary policy designed to influence money supply; issuing national currency; extending loans to banking institutions to ensure liquidity; maintaining international reserves to meet demands for currencies; and determining the exchange rate policy.
It acts as the banker, financial advisor and official depository of the government.
Apart from the capital buildup, the Drilon measure sought to expand the BSP’s regulatory function to include credit card companies, money changers, e-money issuers, remittance agents, payments and settlement system operators.
In effect, the BSP will oversee the payments and settlements system in the country in accordance with “sound and prudent practice,” he said.
Under the bill, the BSP is granted powers to obtain information on transactions between a supervised institution and a parent company or other affiliates, said Drilon.
It’s also authorized to look into the main activities of companies affiliated with parent companies that “have a material impact on the safety and soundness of the bank and the banking group,” he added.
The measure also seeks to strengthen the BSP’s monetary stability function by restoring its authority to issue “negotiable certificates of indebtedness” even during normal times, Drilon said
This power was granted to the old Central Bank of the Philippines, but was not included in the current BSP charter, he said.