The Bangko Sentral ng Pilipinas (BSP) is collaborating with Bundesdruckerei GmbH, a German banknotes printer, to improve BSP’s payments and currency management including production, securities and digital payments infrastructure.
BSP Governor Eli M. Remolona Jr. said Thursday, Oct. 24, that the partnership will help the central bank to seamlessly shift to the era of modern currencies.
He said the BSP knows that there is a “need for banknotes for a long time to come” even as the BSP “shift more and more payments to electronic form.”
Remolona also said the work going forward with the German state-run Bundesdruckerei which he said is “a leader in providing modern currencies to the world” will be timely “when banknotes should be more secure, more durable, and even more sustainable.”
The BSP and Bundesdruckerei signed a five-year memorandum of understanding (MOU) last Oct. 10 at the BSP headquarters in Manila. The MOU included the agreement to work together on technology exchange; staff exchange and training; information-sharing on legal aspects relevant to payments and currency management; and other areas to provide support, assistance, sharing of best practices and expertise, and capacity-building or technical assistance to each other.
“Effective for five years, the MOU highlighted the importance of cooperation in payments and currency management to enhance and strengthen the roles of government entities in the post-pandemic economic recovery and sustain the growth of both economies,” according to the BSP.
Under the MOU, the BSP and Bundesdruckerei will collaborate on currency management and production; securities management and production; digital payments infrastructure; and research and development on digital payments and banknote substrate which is a special material used to produce banknotes.
The BSP, while it has started to shift to polymer banknotes in 2021, is also migrating more of retail payments into digital form. By the end of 2023, 52.8 percent of total retail transaction volume in the Philippines have converted into digital or e-payments, exceeding the original target of 50 percent.
Last year, the share of digital payments to total retail payments of 52.8 percent is equivalent to 2.62 billion monthly payment transactions made digitally. This translates value-wise to $110 billion or P6.1 trillion.
Remolona has said that its pursuit of a cash-lite economy has consistently been progressing and now that that they have achieved their initial goal, “we are ready to bring digital finance to new heights.”
The next target is to achieve a 60 percent to 70 percent share of digital payments over total retail transaction volume by 2028.
As for the banknotes circulation in the Philippines, most are still paper-based but there are about one billion pieces of P1,000 polymer bills that will be in circulation overtime from an initial 500 million.
BSP Deputy Governor Mamerto E. Tangonan has said that the cost of outsourcing polymer is more manageable and less expensive. Tangonan is in charge of the payments and currency management sector.
The BSP’s printing complex in Quezon City currently has no capacity to produce polymer money, thus the need to outsource polymer banknotes from Note Printing Australia, a subsidiary of the Reserve Bank of Australia.
The BSP paid Note Printing Australia P3.7 billion to produce, supply and deliver 500 million pieces of P1,000 polymer banknotes from 2021 to 2023.