The Bangko Sentral ng Pilipinas (BSP) is about to fully adopt the Principles for Financial Market Infrastructures (PFMI) as a systematically important payment system (SIPS) soon, according to its highest-ranking official.
“The BSP is set to achieve full observance of the principles (of PFMI),” BSP Governor Benjamin E. Diokno said in an online press chat updating PFMI progress. However, the BSP did not indicate when or the timeline of the full adoption.
In July this year, the BSP’s Peso Real-time Gross Settlement System (PhP-RTGS) using PhilPaSSplus, became a designated payment system or DPS and as a SIPS.
“Prior the designation, it has already adopted PFMI with the implementation of new technology in the infrastructure of PhilPaSSplus this year as well as other planned enhancements in the payment system,” said Diokno.
The PFMI adoption is crucial as it is expected to strengthen financial stability in the country. “Adherence to global standards set under the PFMI supports financial stability by enhancing the transparency, risk management, and resiliency of payment systems,” said Diokno.
It is also expected to improve efficiency in payment systems, resulting in more payment options. “This fosters consumer welfare and the protection of public interest, especially amid the rising use of digital payments by Filipinos,” he added.
All SIPS and prominently important payment systems (PIPS) are mandated to adopt PFMI.
The BSP said SIPS pose or have the potential to pose systemic risk that could threaten the stability of the national payment system (NPS). PIPS, on the other hand, may not trigger or transmit systemic risk but could have a major economic impact, or undermine the confidence of the public in the NPS or the circulation of money. PIPS are usually associated with widely utilized retail payment systems.
For non-designated payment systems, the BSP may apply key considerations under relevant PFMI principles to assess their practices, design, and operations.
The PFMI was developed by the Bank for International Settlement and the International Organization of Securities Commissions. It has 24 principles applicable to financial market infrastructures such as payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories.
The BSP said 18 principles apply to SIPS while 14 are for PIPS since retail payment systems have less financial risk because of their low-value transactions.