The reorganization of the Bangko Sentral ng Pilipinas’ (BSP) currency and digital money sector will ensure the two payments system will continue to smoothly co-exist until the country is a completely cashless society, according to BSP officials.
“My own forecast is that the use of old money will slowly fade away as the use of digital payment develops. Whether there will be a cashless society, that’s possible, but not within my lifetime,” BSP Governor Benjamin E. Diokno said on Wednesday during his virtual “GBED Talks”. He has said that his personal goal is to have a cash-lite society where 50 percent of all payment transactions are digital before his term as BSP’s fifth governor ends in mid-2023.
To prepare for the next two years and a cash-lite payments environment, the BSP has recently reorganized its currency management sector into a payments and currency management sector (PCMS) for a well-functioning payments and cash ecosystem.
Diokno said the creation of PCMS aims to ensure the safety, efficiency and reliability of payments system in the country. “There have been well-documented benefits (in) electronic payments. One empirical study revealed that moving to cashless model would have an impact of one percentage point to annual GDP among mature economies, and more than three percentage points to those of emerging economies,” he said.
The PCMS, which consolidates existing currency and payment management units, is also in charge of banknotes, coins, refining gold and the printing of national ID cards. Currently, the BSP is in the process of constructing a 30-hectare currency production facility in Tarlac which is expected to be completed around the same time when half of payments transactions will be e-payments or digital currency.
Besides all other functions formerly under the currency management sector, the new PCMS will also handle the licensing and supervision of payment system operators, form strategies and policies for currency and payments systems including the digital payments transformation and currency forecastings. The operations of the Philippine Payment and Settlement System and administration of the digital Personal Equity Retirement Account will also be handled by the PCMS.
The Monetary Board, chaired by Diokno, two weeks ago created the position of the BSP’s fourth deputy governor, and hired a digital financial services expert Mamerto E. Tangonan as head of PCMS with a designation of deputy governor. This is the first time that a BSP outsider was appointed as deputy governor.
Tangonan said his job is to introduce additional payment streams in the next two years, beginning with the full rollout of the QRPh for payments from persons to merchants, followed by the Bills Payment facility and the Request to Pay facility.
As announced by Diokno earlier, these payments digitalization initiatives will be implemented successively. The QRPh for P2M payments is expected to have a full launch by July this year.
While Tangonan is touted as having “28 years of experience in digital and traditional financial services, telecommunications, technology, financial inclusion and consulting services” — leading the BSP’s currency management sector has traditionally been an insider job as this was a huge undertaking that will involve currencies and securities production, and currency management operations.
In other central banks, the one in charge of payments would usually have a managing director or its equivalent position. Deputy governor position is always reserved for monetary policy, banking supervision and corporate services.