Recent Developments

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):

  1. performance of oversight activities on payment service providers, operators of payment systems and other relevant payment system participants

  2. scope and dynamics of payment system oversight, including the extent of cooperative oversight

  3. 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:

  1. market share

  2. aggregate settlement risk based on volume and value of transactions

  3. nature of transactions that the system processes

  4. interdependence with other payment systems or financial market infrastructures

  5. 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 psod@bsp.gov.ph until 30 March 2020.

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