Foreign exchange (FX) rules have been further liberalized by monetary authorities, a development expected to give investors greater flexibility in terms of managing investments and cash flows.
The Bangko Sentral ng Pilipinas (BSP), in a statement on Thursday, announced that its policymaking Monetary Board had approved fresh reforms to the FX regulatory framework.
“The reforms intend to facilitate access to the banking system’s FX resources for legitimate transactions, and further streamline and simplify procedures and documentary requirements for FX transactions,” it said.
Amendments include the broadening of the coverage of inward investment transactions, allowing the registration of investments filed beyond the prescriptive period, expanding the definition of eligible banks that can register investments on behalf of the BSP, streamlining processes and simplifying documentary requirements, and facilitating the sale of foreign exchange relating to investments.
Monetary authorities also expanded the coverage of outward investment transactions and lifted the requirement of prior central bank approval for FX purchases beyond the threshold amount, subject only to prior notification to the BSP.
The submission of supporting documents by electronic means has been allowed for the registration of private sector foreign loans/borrowings without public sector guarantee, registration of inward investments and FX sales by banks.
Also approved was a grace period of one year from the effectivity of the implementing circular for the filing of applications for registration of investments regardless of the date of funding, while a transitory period of six months was set for the implementation of new/revised reports based on International Monetary Fund Balance of Payments and International Investment Position Manual standards.
“This is aligned with the BSP’s thrust to further deepen and develop a robust capital market through a more liberal policy environment, taking into consideration adherence to international practices and standards,” the central bank said.
The liberalization thrust, it claimed, is being pursued in a well-calibrated and well-sequenced manner.
“Notwithstanding the further liberalization of FX rules, the BSP maintains its ability to gather current, comparable and comprehensive data on FX transactions and adopts necessary prudential measures to address any perceived emerging concerns,” it added.
The Bangko Sentral emphasized that banks were still expected to implement safe and sound practices amidst the continuing liberalization of foreign exchange rules.
‘Further, the BSP will remain vigilant and ready to act, as necessary, in pursuit of its mandate to maintain price stability, a sound financial system, and a convertible Philippine peso to support a sustained and inclusive growth,” it said.