The Bangko Sentral ng Pilipinas (BSP) is looking into the lower-denominated currencies, both banknotes and coins, that have low demand or may have reduced public usage as they improve their currency forecasting capabilities.
While the review is part of BSP’s periodical evaluation of all currency denomination, BSP Governor Benjamin E. Diokno said focus is on denominations which have low or waning demand in terms of public usage as the country transitions into a more digitalized payment systems.
“In the conduct of currency demand forecasts, currency planning and production, the BSP is currently looking into denominations that have low demand,” said Diokno in a virtual press chat on Monday, June 20.
Diokno said the changing mix of currency denomination “should be compatible with the real demand in response to changes in circumstances such as in e-payment usage, price level and consumer preferences.”
One of the first things that Diokno, who will leave the BSP for his new stint as finance secretary by the end of this month, did when he assumed the unexpired term of the late Nestor A. Espenilla Jr. in 2019 was to issue a P20 coin alongside its banknote version that is still in circulation up to today.
The BSP outsourced a P20 coin to reduce the cost of replacing P20 unfit banknotes, said Diokno.
The outgoing BSP chief reiterated on Mondat that the emergence of conctactless payment technology has revolutionized the retail payment systems.
“The use of banknotes and coins is expected to taper off over time particularly the low-denomination currencies,” he added.
The BSP is always improving on the usefulness of its currency forecasting especially with the rise of digitalization and the need for a more cost-effective currency production.
To strengthen its currency forecasting methods and capabilities, the BSP leverages on rapid technological advancements in the global payment system.
Besides the periodic reviews of its forecasting models, the BSP also conducts specialized learning and development programs on currency forecasting and mandatory econometrics training for its forecasting team.
Diokno said since the BSP is the sole issuer of Philippine currency, they have to continuously provide undisrupted, responsive, and strategic currency services throughout the entire cash cycle, which begins with forecasting demand.
Since last year, the BSP has been analyzing and reviewing the currency denominational structure as the country transitions into a cash-lite and non-coin society.
The BSP is in fact preparing the public for an eventual coinless payment method by 2025 or even earlier.
Diokno said previously that BSP will have a “phased approach” in transitioning from a cash-heavy to a state where there is less cash and less coins in circulation. The aim is that by next year, 50 percent of all payment transactions are in digital form. As of end-2020, about 20.1 percent of all transactions have migrated into digital or e-money.
At the moment, the BSP prints five banknotes denominations and seven coin denominations.
The seven coins produced by the BSP are the 1-sentimo, 5-sentimo, 25-sentimo, 1-piso, 5-piso, 10-piso and 20-piso. The 10-sentimo has been removed when the New Generation Currency coins were re-launched in 2018, but it was not demonetized.
Both the banknote and coin version of the P20 will continue to co-exist until the BSP rans out of materials for the P20 banknote, but to date, the BSP has not called for its demonetization yet. The five banknotes remain as the 50-piso, 100-piso, 200-piso, 500-piso and 1,000-piso.
Meantime, since April this year, the BSP has released 10 million of polymer P1,000 banknotes which it outsourced from the Austrailian central bank.
For 2022, the BSP will circulate 158.4 million of polymer money. The next batch will be circulated in September. Next year, the BSP said it will release a larger volume of polymer banknotes amounting to 331.6 million.