The House of Representatives has approved on second reading a measure providing for the regulation and supervision of the payment systems in the Philippines.
House Committee on Banks and Financial Intermediaries and PDP-Laban Rep. Ben Evardone of Eastern Samar, one of the authors of the measure, said the House Bill 5000 will provide payment systems, which is a vital part of the economic and financial infrastructure of the country.
“They provide the critical networks in financial systems enabling a variety of financial transactions to be cleared and settled. The volume and magnitude of financial transactions passing through such payment networks justify the need for payment systems to be safe and efficient. It is also indispensable that they are reliable, as it plays a key role in building public confidence and helping maintain financial stability,” Evardone said.
While the growth and development of payment systems are indicative of their valuable contribution to the movement of funds in the economy, he said their operations can give rise to risks, which, if left unaddressed, can also adversely impact financial stability and the economy, as a whole.
“By linking financial institutions together for the purpose of transferring monetary claims and settling payment obligations efficiently, payment systems become channels through which financial risks can be transmitted across financial institutions and markets,” he said.
Evardone added central banks are keen in monitoring developments in the payment system to assess their impact on the demand for money, the influence of monetary-policy transactions and the efficiency and stability of critically related financial markets.
“Developments in the payment system can affect the speed and predictability of the turnover of monetary balances, which may influence the overall demand for money in the economy,” he said.
Currently, Evardone said there are a number of central banks, which have mandates to oversee payment and settlement systems, including Bank Indonesia, Bank Negara Malaysia, Central Bank of Myanmar, National Bank of Cambodia, Bank of Lao PDR, Monetary Authority of Singapore, Deutsche Bundesbank, Bank of France, Banco de España, Bank of Japan and State Bank of Vietnam.
“Unlike the central banks mentioned, the powers of the Bangko Sentral ng Pilipinas [BSP] as provided in its charter and other special laws do not extend to entities which operate payment systems. Neither is the Bangko Sentral granted the power to oversee payment systems in the country,” he said.
The bill specifically seeks to provide the authority to the BSP to oversee the payment systems in the Philippines, and exercise supervisory and regulatory powers for the purpose of ensuring the stability and effectiveness of the monetary and financial system.
In the exercise of this authority, the bill said the BSP shall be guided by internationally accepted standards and practices.
To ensure proper implementation of this mandate, the bill also requires the BSP to coordinate with other regulators and other concerned agencies to avoid gaps, inefficiencies, duplication and inconsistencies in the regulation of other systems that are related to or interconnected with payment systems; and shall endeavor to coordinate with regulators or overseers of payment systems of other countries to facilitate safe, efficient and reliable cross-border payment transactions.
Under the bill, whenever a person or entity willfully violates this Act, rule or regulation, directives or orders duly promulgated by the Monetary Board pursuant to this act, that person or entity shall be punished by fine or imprisonment, or both, at the discretion of the court.