The central bank has bared a new set of liberalized rules on foreign exchange that allows local firms to more easily transact with the rest of the world.
The new rules were also designed to help offset the massive surge of foreign money that has been entering the economy since the start of the year, creating volatility in the foreign exchange and stock markets.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said it would now allow local banks and businesses to make early payments even on short-term loans, or obligations that mature in a year or less.
This is expected to encourage the exit of foreign capital from the country.
The BSP said it would also waive documentary requirements for banks to support loans for importers, as long as lenders maintain proper records that government bank examiners can look into later.
Likewise, the regulator said it waived the requirement for the central bank’s approval before local banks can extend foreign exchange loans, collateralized by offshore loans and deposits of the same bank, to the private sector.
“The BSP will continue to review rules on foreign exchange transactions and make amendments thereto as necessary to ensure that the regulatory framework is appropriate, considering current economic conditions,” BSP Deputy Governor and Officer-in-Charge Vicente S. Aquino said in a statement.
The BSP tracks the entry and exit of foreign exchange in the country as part of its mandate to maintain price and economic stability.
Last August, the BSP said it increased the amount of foreign currencies that may be bought by residents from banks and other foreign exchange institutions without documentary requirements from $60,000 to $120,000.
The BSP also increased the amount of foreign exchange that may be purchased using unspent pesos by foreign tourists or “balikbayans” without documentary requirements from $5,000 to $10,000.
The regulator also expanded the list of allowed sources of funding of a peso account that a foreigner may open. This will include income earned in the Philippines.