MANILA, Philippines—The local financial system was expected to be more stable as regulators and players adopt a set of rules governing the country’s critical payments infrastructure, the central bank chief said on Thursday (Nov. 11).
At an online briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the Principles for Financial Market Infrastructures (PMFI), which will be applied to designated payment systems, will also improve efficiency and result in more payment options for end users.
“Adherence to global standards set under the PFMI supports financial stability by enhancing the transparency, risk management, and resiliency of payment systems,” he said. “This fosters consumer welfare and the protection of public interest, especially amid the rising use of digital payments by Filipinos.”
The BSP mandates adherence to these principles by payment systems that are classified by the regulator either as “systemically important” or “prominently important”.
The first poses or has the potential to pose systemic risks that could threaten national payment instability. The second may not trigger or transmit systemic risks but could have a major impact or undermine public confidence in the payment system or circulation of money.
Prominently important payment systems are usually associated with widely utilized retail transaction methods.
For non-designated payment systems, the BSP may apply key considerations under relevant principles to assess practices, design and operations.
Developed by the Bank for International Settlement and the International Organization of Securities Commissions, the PFMI consists of 24 principles applicable to financial market infrastructures like payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories.
Eighteen principles apply to systemically important payment systems. For prominently important ones, only 14 principles apply as retail payment systems are deemed to have less financial risk owing to their low-value transactions.
The central bank rules also sets expectations for critical service providers of designated payment system. This is to help ensure that operations of a service provider are held to the same standards as that of the payment system operator.
The Peso Real-time Gross Settlement payment system operated by the BSP using PhilPaSSplus was approved by the Monetary Board as systemically important in July 2021. The BSP ensures that this payment system adheres to the stringent principles.