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BSP: Paving the Way to Cashless Payments & e-Payments

BSP: Paving the Way to Cashless Payments & e-Payments

Original post by Leony Garcia, featured in Business Mirror

Bangko Sentral ng Pilipinas (BSP) has earned a reputation as one of the finest central banks in the world over the years. It has been known to steer the Philippine economy through many crises, despite being inevitably under the scrutiny because of its huge responsibilities as an institution.

The BSP has welcomed the new ‘captain of the ship’ in Nestor Espenilla Jr. last May 2017.

The new governor’s appointment was closely watched, having been long touted as one of the most important decisions to be made by President Rodrigo Duterte.

Managing the country’s wealth isn’t easy. With numerous threats looming from both internal and external factors, it would take someone with utmost skill and experience to help keep the country afloat. BSP insiders and bank experts have seen these such excellent characteristics in Espenilla.

Handling the country’s wealth reserves is even more tedious, and is even becoming more challenging by the day. Over the years, BSP has had key issues they’ve dealt with that have tested the institution.

INCLUSIVE BANKING

Filipinos have learned to take more risks in business, as they have become more exposed and interested in entrepreneurship. Due to this, the need in financial support through bank financial systems for micro, small and medium enterprises has increased too. BSP is faced with the challenge to grow with their consumers’ requirements.

Issues of areas with limited to no bank is a whole new issue too. Some rural areas do not have that much banking options, which is a letdown providing there are foreign investors who show interest to risk their capitals. Lack of bank establishments may contribute to these areas’ citizens less exposure to economic opportunities and financial literacy and stability.

E-PAYMENT SCHEMES

Today’s technology allows us to have hassle-free payment schemes. The process of changing our transactions though from cash- and check-based payments to electronic payment ways.

The establishment of the National Retail Payment System (NRPS) has been one of the struggles faced by BSP, in order to improve transactions between banks and other entities that provide payments. These services include mobile phones and financial technology companies.

WHAT DOES BSP DO?

According to Section 2 of Republic Act (RA) 7653 or the New Central Bank Act, the BSP functions as the Philippines’ central monetary authority.

The BSP operates as an independent and accountable body that enjoys fiscal and administrative autonomy, despite being a government corporation. Nonetheless, its functions and privileges are established and protected by law.

The BSP also enjoys corporate powers. As stated in Section 3 of RA 7653, this means that the central bank is allowed to adopt, alter, and use a corporate seal, which is judicially noted. BSP also enter into contracts, lease or own real and personal property, acquire and hold assets and incur liabilities in connection with its functions.

It can also compromise, condone, or release any claim of or settled liability, regardless of the amount involved. The Monetary Board determines the terms and conditions under which this may be done, to protect the interest of the BSP.

FUNCTIONS OF THE BSP

RA 7653 states that the primary objective and responsibility of the BSP is to “provide policy directions in the areas of money, banking, and credit.”

In line with its vision to promote a strong financial system and maintain price stability, its main functions and operations include liquidity management. It is by way of managing monetary supply with the prime objective of maintaining price stability of basic goods and services.

This banking entity can also extend loans, discounts, and advances to banking institutions for liquidity purposes and only as a last resort.

It has financial supervision, as it dictates the rules by which banking institutions operating in the Philippines must play by. It exercises regulatory powers over non-banking institutions performing quasi-banking functions, and dictates capital requirements, reserve requirements, and deposits guarantees of these financial bodies

BSP also determines exchange rate policy – ensure orderly market conditions by adhering to market-oriented foreign exchange rate policy.  It also serves as a financial advisor, a banker, financial advisor, and official depository of the government, including government-owned and -controlled corporations.

HOW DOES BSP NAVIGATE THE FUTURE OF FINANCE?

Businesses worldwide can lessen the costs in exchanging goods and services through a secure, reliable and affordable payment system.  Through the smooth functioning of money and capital markets, more revenues are being attracted by companies, as it also attracts more consumers who enjoy stress-free money transfers.

In the Philippines, the BSP takes the lead in promoting an efficient payments and settlements system by providing the necessary infrastructure through the operations of the Philippine Real Time Gross Settlement System or the “PhilPaSS”. The National Retail Payment System or NRPS, a policy and regulatory framework, establishes safe, efficient and reliable retail payment system in the country.

From a practical perspective on an individual, a lot of time, money and efforts are being saved as they do electronic payments by just taking advantage of BSP’s offerings through their mobile banking via mobile apps or desktop’s website.

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