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    BSP Issues Multiple Regulatory Updates for Banking Sector

    September 02, 2021

    The Central Bank of the Philippines (BSP) issued updates on several financial sector initiatives, including those in the areas of sustainable finance, and digital banking, and the deposit insurance system in the Philippines. BSP continues to strengthen the domestic and international engagement to intensify its campaign for the adoption of sustainable finance principles and announced that it plans to conduct vulnerability assessments and stress testing exercises with volunteer banks. BSP plans to conduct these exercises in partnership with the World Wildlife Fund Philippines, the World Bank, and the industry associations. The campaign for the adoption of sustainability principles is in line with the BSP’s Sustainable Finance Framework issued under Circular No. 1085.

    In a separate development, BSP also published initiatives that aim to support the digital transformation initiatives of the supervised financial institutions, including fintech players, while promoting sound risk technology and cyber risk management. These initiatives include:

    • Transitioning to a new "supervisory rating framework," which hinges on stronger off-site supervision
    • Amendment of the E-Money and Technology Outsourcing Circulars and formalization of its test-and-learn approach or regulatory sandbox
    • Issuance of digital banking policies to encourage better delivery of financial services by digital banks
    • Open finance activity to promote greater interoperability and collaboration among financial institutions and fintech firms

    BSP also announced that ​the Monetary Board decided to close the window for the submission of applications from new digital banks, including converting banks, starting August​ 31, 2021. This is in line with the overall thrust of maintaining a stable and competitive environment for banks. Digital bank applications received until August 31, 2021 will be processed on a first-come, first-served basis and will be assessed for completeness and sufficiency of documentation/information as well as compliance with the licensing criteria on the establishment of digital banks. Applicants that are able to submit the complete documentation on or before the said closure date will be processed by BSP. To date, the Monetary Board has approved the application of five digital banks, including two incumbent banks that have converted their existing licenses to a digital bank license. The three digital banks are UNObank, UnionDigital Bank, and GoTyme, while Overseas Filipino Bank Inc and Tonik Bank are the banks that converted their existing license to digital banks. The Monetary Board approval corresponds to the first of the three-stage licensing process. Meanwhile, BSP is processing two other digital bank applications.

    In another update, BSP announced its support for the legislative initiatives to amend the charter of the Philippine Deposit Insurance Corporation (PDIC). The proposed amendments include organizational reforms that will make the PDIC an attached agency of BSP, which is the regulator of the banking industry. Supported by the International Monetary Fund (also known as IMF), the reform initiative is expected to enhance synergy among BSP, PDIC and other domestic financial regulators in promoting the financial stability in the country. BSP looks forward to continuing coordination with the legislature and the PDIC for the immediate passage of the bill that will amend the PDIC charter. 

     

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    Keywords: Asia Pacific, Philippines, Banking, Digital Banks, Sustainable Finance, PDIC Charter, Vulnerability Assessments, Stress Testing, Open Finance, PDIC, Bank Licenses, Climate Change Risk, Scenario Analysis, Deposit Insurance, Regtech, Regulatory Sandbox, BSP

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