The Bangko Sentral ng Pilipinas (BSP) is maintaining at least P200 billion worth of currency reserves to make sure there is adequate and undisrupted cash operations at all times as the economy gradually builds up momentum to its pre-pandemic growth path.

In a report of its 2022 operations, the BSP said it continues to provide “ample buffer stock” for any “unexpected spikes in currency demand” amid a growing economy and expanding consumer spending.

The BSP sets aside currency reserves as both “precaution and insurance against uncertainties and shocks,” it added.

The BSP has a currency buffer stock of P198.4 billion as of end-2022. The reserves should be equivalent to three months’ worth of banknotes and one month’s worth of coins, based on average withdrawals of banks from the past three years.

Of the P198.4 billion, P197 billion are banknotes and P1.3 billion are coins.

The BSP said it will ensure of “adequate supply of good quality currency to facilitate economic development, especially in the regions, and maintained confidence in the integrity of the Philippine peso.”

The BSP services the country’s currency requirements by doing the following: strategic scheduling and adoption of more efficient modes of currency shipments; a buffer stock to meet currency demand or potential delay in currency delivery to the regions; servicing the withdrawals of banks with new and fit banknotes and coins, in accordance with their denominational requests; and reviewing and updating of currency operational procedures, processes, and practices, aimed at improving operational efficiency and internal controls.

In 2022, the central bank produced a total of 2.3 billion pieces of banknotes and 1.3 billion pieces of coins.

It delivered P430.6 billion worth of banknotes and coins to 23 of its 25 regional offices and branches (ROBs) last year, which was 0.7 percent higher than its 2021 shipments.

It also reported that the frequency of currency increased by 25.6 percent in 2022, with 706 shipments to ROBs via land, air, and sea. “This was despite the many challenges encountered in the procurement of cash-in-transit services and the unsuccessful biddings for the procurement of chartered aircraft services for certain regions,” said the BSP.

Meanwhile, cash withdrawals in the regions were down by 6.9 percent in 2022 from 2021.

The BSP said currency withdrawal is a “significant support to the recovery of local economies by ensuring that an appropriate level of liquidity is present in the system.”

Last year, total withdrawals in the regions amounted to P734.5 billion worth of banknotes and coins, about 6.9 percent lower compared to the previous year due to the combined impact of digitalization and the BSP’s Cash Service Alliance (CSA).

The CSA, first implemented in 2020 during the height of the pandemic, is a currency circulation mechanism to promote the circulation of fit currency among banks.

As of end-2022, 28 out of the 29 authorized agent banks (AABs) participated in the CSA in the BSP’s Greater Manila Regional Office (GMRO), and generated P297.3 billion in cash transactions.

The BSP noted that its GMRO serviced a total 1.307 billion pieces or P505 billion worth of banknotes and 1.43 billion pieces or P7.4 billion worth of coins last year, of which 56.9 percent of AABs’ fit currency holdings were recirculated while 36.7 percent of its currency requirements were sourced through the CSA.

At the moment, the BSP prints banknotes and mint coins at its six-hectare East Avenue, Quezon City Security Plant Complex, built since the 1970s.

To modernize banknotes printing, the BSP will develop a P25-billion 31.2-hectare new Currency Production Facility in New Clark City in Capas, Tarlac. It has completed the design phase earlier this year and is set to bid out the contract for the general contractor.