The Bangko Sentral ng Pilipinas (the BSP or the Philippines' central bank and monetary authority) has recently circulated a draft circular on payment system oversight framework, which covers the following key areas of the BSP's oversight function under Republic Act No. 11127 or the National Payment Systems Act (NPSA):
- performance of oversight activities on payment service providers, operators of payment systems and other relevant payment system participants
- scope and dynamics of payment system oversight, including the extent of cooperative oversight
- designation criteria and expectations on participants of designated payment systems.
Under the draft circular, the BSP will designate a payment system as a "systemically important payment system" if the system poses or has the potential to pose systemic risk. In addition, a payment system may be designated as a prominently important payment system if the system is necessary to preserve public interest. The criteria for determining the importance of payment systems include the following:
- market share
- aggregate settlement risk based on volume and value of transactions
- nature of transactions that the system processes
- interdependence with other payment systems or financial market infrastructures
- absence of alternative payment system
Note that under the NPSA, an operator of designated payment systems is required to incorporate as a stock corporation.
Actions to Consider
Stakeholders are encouraged to submit comments on the draft circular to the Payment System Oversight Department of the BSP at email@example.com until 30 March 2020.