Bank regulators want Philippine corporate and retail borrowers to eventually have unfettered access to foreign currency loans as long as they fully understand —and fully assume responsibility for—the risks involved.
According to Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo, the current strategy of liberalizing the country’s foreign exchange market and transactions regime is ultimately meant to give investors quicker access to overseas resources.
The FX liberalization strategy of the BSP is aimed at removing policy and procedural obstacles to both business and public sector access to foreign exchange from both the banking system and outside.
“The Philippine economy is surging forward and it’s critical that both domestic and foreign investors have quick access to foreign exchange resources,” he said, explaining that the country was strong enough to accommodate larger cross-border capital flows with less regulatory supervision.
Guinigundo’s pronouncement came after the BSP announced that banks would no longer need regulatory approval to convert their foreign currency-denominated obligations into peso loans. At the same time, these loans and other acquired or repossessed assets booked in banks’ foreign currency holding subsidiaries can now be transferred freely into the regular books of the financial institution without prior approval from the central bank.
“These transactions no longer require prior BSP approval under certain conditions which seek to ensure that banks fully understand the nature and extent of the risks involved and that they have put in place appropriate business policies and risk management systems to manage these transactions,” the central bank said. —DAXIM L. LUCAS