MANILA, Philippines—A central bank-operated electronic framework, which forms the backbone of the country’s payment and fund flow infrastructure, will now be subject to tighter operating procedures to guarantee its integrity, the regulator said on Monday (Aug. 16).
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its policy-making Monetary Board recently approved the designation of the Philippine Peso Real-Time Gross Settlement (PhP-RTGS) scheme as a “systemically important payment system”.
This designation — the first of its kind in the country under the National Payment Systems Act — is used for payment networks which, if disrupted, could pose a so-called systemic risk that could threaten the stability of the economy.
Because of the critical nature of the service, the BSP said all stakeholders involved in the payment systems are compelled by the designation “to adhere to the rules, standards and requirements promulgated by BSP and fulfill their respective roles to ensure its safety, efficiency and reliability.”
PhP-RTGS is the first structure to be designated as a systemically important payment system by the BSP under the law, which gives the regulator the authority to protect a scheme determined to be critical to protecting public interest.
As a designated payment system, the PhP-RTGS shall observe the principles for financial market infrastructure as laid down by BSP regulations. The adoption of this standard ensures that the payment system is operating in condition at par with global practices on safety, efficiency and reliability.
“The public can benefit from the safeguards that the designation provides as the PhP-RTGS, being the payments backbone supporting the flow of funds in the country, continues to operate fostering economic development,” the BSP said.
The PhP-RTGS is the sole payment system in the Philippines that facilitates settlement with BSP money. BSP’s open market operations and issuance of its securities are settled through the PhP-RTGS. Likewise, the system settles the Philippine peso leg of foreign exchange and domestic securities transactions.
Also, it services the deferred net settlement of retail payment systems, namely checks, ATMs, PESONet and InstaPay.
Last year, the system settled a total of P544 trillion in transactions, which is about 30 times the P18 trillion nominal gross domestic product of the country for that period.
The BSP’s authority to designate payment systems is also a salient feature of the risk-based approach set in the payment system oversight framework which is part of the law’s implementing rules and regulations.