Foreign exchange rules will be further relaxed in a bid to attract investments to the Philippines, the chief of the Bangko Sentral ng Pilipinas (BPS) said.
“It is about further liberalization of investment rules. We want to make it easy for investments to come in,” central bank Governor Nestor Espenilla Jr. told reporters.
The Bangko Sentral, he added, is still in the process of gathering industry comments.
He declined to provide more details, only saying “let us just wait a little bit until that becomes a mature policy.”
Espenilla, who took over as BSP chief in July last year, has vowed to continue liberalizing the foreign exchange market in line with the opening up of the banking industry.
The central bank has said that the continuing review of forex regulations was consistent with a “commitment to maintain a safe and sound financial system, a stable FX market, and an appropriate monetary policy…”.
One of the foreign exchange rules recently liberalized by the BSP was the conversion of foreign currency loans granted by banks to peso loans and the transfer of such loans as well as real and other properties acquired from banks’ foreign currency deposit unit books to regular banking unit books.
Under the relaxed rules, banks will no longer need prior regulatory approval when converting and transfering foreign currency loans and accounts.
In its 2017 annual report, the BSP said that foreign exchange regulation liberalization had served the growing economy’s foreign exchange requirements and helped maintain a healthy payments position.
“In general, the Philippines has benefited from the liberalization efforts that the BSP initiated since 2007,” it claimed.
The BSP also noted, however, that “financial liberalization … equally opens the economy to certain risks.”
The key, it said, is for economic benefits to outweigh risks attached to liberalization, which will depend on the timing, the strength of the country’s macroeconomic fundamentals and the presence of sound macroprudential regulations that could lessen the threats of market volatility.