Philippine Central Bank Designates Systematically Important Payment Systems
The Philippine’s Central Bank, the Bangko Sentral ng Pilipinas (BSP), through its Monetary Board, has approved the designation of the Philippine Domestic Dollar Transfer System (PDDTS) and the PhP – USD Payment vs. Payment System (PVP) as Systemically Important Payment Systems’ (SIPS) pursuant to Republic Act No. 11127 or the National Payment Systems Act (NPSA) and BSP Circular No. 1089 or the Payment System Oversight Framework (PSOF).
The BSP was authorized under the NPSA to oversee 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. It is also given the power to designate a payment system if it determines the payment system as posing or having the potential to pose a systemic risk or the designation is necessary to protect the public interest. Furthermore, the BSP was given an authority under the statute to accredit or require, when deemed necessary, a payment system management body organized by participants of the designated payment system for the purpose of self-regulation. The said accredited payment system management body is then authorized to issue and enforce rules and regulations, and impose appropriate sanctions among participants of the designated payment system subject to the authority of the BSP to review and approve such rules and regulations.
Both the PDDTS and PVP were established by the Bankers Association of the Philippines and are under the operation of the Philippine Clearing House Corporation (PCHC). The BSP grants the PCHC authority as operator of designated payment systems (ODPS) pursuant to Section 6 of the NPSA.
As ODPS, the PCHC is tasked with ensuring (a) safe, efficient and reliable operations of the PDDTS and PVP; (b) observance of the applicable Principles for Financial Market Infrastructures’ (PFMl) for SIPS pursuant to the BSP regulations on the adoption of the PFMl; and (c) compliance with the applicable requirements for an ODPS under the NPSA, PSOF and subsequent regulatory issuances.
The full circular letter may be accessed here.