IT is happening in small increments but the Bangko Sentral ng Pilipinas (BSP) should soon begin bilateral discussions with its Indonesian counterpart on the entry of banks and financial institutions in each other’s jurisdiction. This was as marked by the signing of a letter of intent (LOI) between Manila and Jakarta over the weekend.
Bangko Sentral Governor Amando M. Tetangco Jr. said the signing was another step forward in the larger goal of financial integration happening not just over the Philippines and Indonesia but across the Asean.
“The BSP welcomes the signing of a letter of intent with the OJK of Indonesia. This will be done in Jakarta this weekend,” Tetangco said of the agreement with the Otoritas Jasa Keuangan.
“The LOI is in line with the Asean Banking Integration initiative. It reflects the mutual interest of the BSP and OJK to begin discussions intended to culminate in a formal bilateral agreement on the entry of qualified Asean Banks [QABs] between the Philippines and Indonesia,” he added.
In early April the BSP sought bilateral agreements with other Asean members with the signing of the Declaration of Conclusion of Negotiations (DCN) and subsequent entry of QABs between the BSP and Bank Negara Malaysia.
The agreement, signed in Mactan, Cebu, specified the conditions under which QABs from each country were to participate in the other.
Also the BSP signed a similar LOI to begin bilateral discussions with the Bank of Thailand (BOT).
The Asean Banking Integration Initiative enjoins the Asean-5 to forge at least one bilateral agreement with a counterpart by 2018. The Asean-5 pertains to Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The framework also targets the conclusion or near conclusion of at least one bilateral agreement for each of the 10 Asean members by 2020.
Deputy BSP Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr., who takes over the helm when Tetangco bows out of service on July 3 this year, vowed to continue to pursue the bilateral discussions with counterparts in the Asean.
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