Banknote sharing saves banks P119M

A peso banknote-sharing scheme among banks—done through the Cash Service Alliance (CSA) and bypassing the Bangko Sentral ng Pilipinas (BSP)—has enabled banks to save a total of P119 million in operating expenses since the initiative’s rollout in October 2020.

The CSA is a partnership between the BSP and the Bankers Association of the Philippines, that enables banks to use their available cash holdings to service the needs of other banks for the local currency.

According to the BSP, banks that operate in the Greater Manila Area have sourced P302 billion worth of banknotes from CSA, from October 2020 to December 2021.

The regulator said that during the imposition of stricter lockdowns between March 29 and May 14 in 2021, the CSA facilitated the exchange of peso banknotes amounting to P34 billion.

“This initiative guarantees that the public’s cash requirement is continuously served through the direct exchange of fit currency among banks amid the challenge of transporting cash during community quarantine restrictions,” said BSP Governor Benjamin Diokno.

Also, the CSA is expected to provide a source of currency to banks during emergency situations, weather disturbances, and localized holidays that affect banking operations.

Diokno said such a mutually beneficial arrangement among banks was especially responsive to logistical challenges in an archipelago such as the Philippines.

“Through the CSA, banks are gradually experiencing the benefits of forming cash alliances among peers, resulting in lower operating cost,” Diokno explained.

As of end-January, client banks collectively saved service fees amounting to P73 million and P46 million, respectively, for deposits and withdrawals with the BSP.

“The CSA provides an innovative cash management system that is future-proof, responsive and resilient to the changing times,” Diokno said.

Considering the CSA’s success in the Greater Manila area, the BSP has also expanded the CSA’s scope to 22 BSP regional offices and branches as of August 2021.

The BSP touts the CSA initiative as internationally recognized, having been feted by the United States-based International Association of Currency Affairs as the “Best Currency Initiative Implemented in Response to the COVID-19 Pandemic (Central Banks Category for Y2021).”