BSP sets payment systems' manual of regulations
The Bangko Sentral ng Pilipinas (BSP) announced that it has released the manual of regulations for payment systems (MORPS) to maintain the “stability and integrity” of the country’s National Payment System (NPS).
The NPS ensures the circulation of money or movement of funds in the Philippines. The BSP owns and operates the peso-denominated real time gross settlement system (RTGS PS) or the PhilPaSSplus, a designated systemically important payment system (SIPS).
BSP Governor Eli M. Remolona Jr. said the MORPS is “primarily designed to foster adherence by operators of payment systems to standards that are aimed at fortifying the safety, efficiency and reliability of the NPS.”
He also said the MORPS as it is, encapsulates the cumulative compilation of the rules and regulations issued as of end-December 2023.
In a statement over the weekend, the BSP the MORPS which was issued as Circular No. 1191, will guide both NPS participants and the Filipino public “on the rules and regulations governing the operations of the NPS, including the services, processes, procedures, and responsibilities of the participants.”
“The compliance of payment system participants with the regulations outlined in the MORPS is crucial for the stability and integrity of the payment systems,” said the BSP.
The central bank said that non-compliant NPS participants will be slapped with BSP's supervisory and enforcement actions under the New Central Bank Act and Republic Act No. 11127 or the National Payment Systems Act (NPSA).
“As the financial landscape continues to evolve, the BSP remains steadfast in its commitment to provide a regulatory framework that supports the growth of digital payments,” said the BSP, adding that the MORPS “is a cornerstone of the BSP's commitment to build a robust and inclusive financial ecosystem for the benefit of all Filipinos.”
The MORPS encompasses or summarizes the various payments-related policy and regulatory issuances by the BSP under the provisions of its charter or Republic Act No. 7653 and 11211 as amended.
“The MORPS will be updated annually to ensure that all payments-related policy issuances of the BSP are appropriately codified,” said the BSP.
The BSP’s RTGS PS ensures public welfare by enabling the efficient and low-risk settlement of retail payments in central bank money.
In 2022, the BSP approved another round of rules to the RTGS PS after it was designated as a SIPS.
The BSP updated and amended the RTGS PS rules since as SIPS, it could pose systemic risks and threaten the stability of the NPS.
The BSP’s payment system is responsible for the smooth flow of funds between financial institutions that have settlement accounts with the BSP. lt also facilitates funds transfers in financial markets where these institutions trade securities and foreign currencies for business and risk management purposes, said the central bank.
The Switzerland-based Bank for International Settlements (BIS) issued the guidelines for the SIPS.
A BIS paper said SIPS are an “essential mechanism supporting the effectiveness of financial markets (but) they can also transmit financial shocks.” This is particularly true for “poorly designed systems” that “may contribute to systemic crises if risks are not adequately contained, with the result that financial shocks are passed from one participant to another.”
Such system-wide disruption and threats to the stability of money markets is what makes SIPS crucial for the economy, said BIS, noting that “their safety and efficiency should be objectives of public policy.”