DIGITAL BANKS c.
accept foreign currency deposits, as defined
(WEEK 11-12)
Landscape of Digital Payments and Digital
Finance Inclusion
DIGITAL BANKS
- A digital bank offers financial products and
services that are processed end-to-end through a
digital platform and/or electronic channels with no
physical branch/sub-branch or branch- lite unit
offering financial products and services.
- No physical branches.Financial products are
processed on digital platforms and entirely online.
- minimum required capital is 1 billion
CONDUCT OF BUSINESS
- Similar to other types of banks, a digital bank shall
be subject to all prudential requirements set out by
the Bangko Sentral.
- Banks converting to digital banks shall be given a
period of three (3)years from approval of the
Monetary Board within which to meet the minimum
capital requirement.
PHYSICAL TOUCHPOINTS
- Digital banks shall be required to maintain a
principal/head office in the Philippines to serve as
the main point of contact for stakeholders,
including the Bangko Sentral and other
regulators.
- The registered principal/head office of the digital
bank shall house the offices of management and
other support operations. lt may also serve as the
central hub for receiving and resolving customer
complaints.
APPLICATION AND LICENSE FEES FOR NEW
DOMESTIC BANKS
POWERS and SCOPE of AUTHORITIES
A digital bank may perform any or all of the
following services:
a. grant loans, whether secured or unsecured;
b. accept savings and time deposits, including
basic deposit accounts as defined under Sec. 213;
under R.A. No. 6426, as amended;
d. invest in readily marketable bonds and other
debt securities, commercial papers and accounts
receivable, drafts, bills of exchange, acceptances
on notes arising out of commercial transactions;
e. act as correspondent for other financial
institutions;
f. act as collection agent for non-government
entities;
g. issue electronic money products subject to the
guidelines provided under Sec. 702;
h. issue credit cards;
i. buy and sell foreign exchange; and
j. present, market, sell and service microinsurance
products subject to the guidelines provided under
Sec.113-8
6 BSP Approved Digital Banks (Neo Banking)
Lists
1. UnionDigital of UnionBank of the Philippines
- It is the fi
- rst publicly listed bank to be granted a
digital banking license,
- UnionBank is the fourth applicant to be
granted digital bank license.
- BSP approved UnionBank’s digital bank
license July 15 2021. a subsidiary of
UnionBank
2. MayaBank
- MayaBank is owned by Voyager
Innovations, the company behind
PayMaya, one of the leading online
platforms in digital payment. The
MayaBank will offer different products such
as savings, credit, as well as investments.
- We also expect the MayaBank to be
integrated with PayMaya for easy transfer
of funds as well as fast cash-in from
Mayabank account to PayMaya.
3. Tonik Bank
- One of the first digital banks in the
Philippines. It offers several exciting
services in digital banking. Products like
Staches, a personal goal savings with a
high- interest rate. It also offers time
deposits, debit cards as well as loans. It
supports Android, and iOS for their
smartphone app.
4. OF Bank (OverSeas Filipino Bank)
- Overseas Filipino Bank, a subsidiary of
LAND Bank, is the first digital only,
branchless bank in the Philippines. The
first is a government-owned bank, and the
next two digital bank licenses were granted
to a Singapore digital bank and a financial
technology company, also from Singapore.
5. GOTyme Bank
- A partnership with GokongWei Group, and
Singapore-based digital banking group
Tyme. This digital bank offers secure, fast
digital payment transactions, savings via
an app as well as digital KIOSK.
6. UNOBank of Singapore
- Owned by Singapore-based financial
technology (fintech) firm DigibankASIA
Pte. Ltd. South East Asia’s first full-
spectrum digital bank licensed under the
Bangko Sentral ng Pilipinas.
- This is the third entity to get regulatory
approval to operate as a digital bank for
this year, license granted June 2021.
TRANSACTIONS IN BANKS
DEPOSIT
- Any unpaid balance of money or its equivalent
received by a bank in the usual course of business
and for which it has given off is obliged to give
credit to commercial, checking, savings, time or
thrift accounts.
SAVINGS DEPOSIT
- Meant for individuals who wish to deposit small
amounts out of their income. There are restrictions
on the withdrawals from these accounts.
- Savings account holders are als0 allowed to
deposit cheques, dividend warrants, etc. drawn in
their favor for collection by the bank.
CURRENT DEPOSIT
- Also known as DEMAND DEPOSIT.
- Can be withdrawn by the depositor at any time by
cheques.
- Current accounts do not carry any interest as the
account deposited in these accounts is payable on
demand without restriction.
PCHC Clarifies the Reminders in
Writing/Handling of Checks
01.30.2017
- The Philippine Clearing House Corporation
(PCHC) issued on 24 January 2017 a
Memorandum to All Clearing Banks/Institutions
clarifying the advisories previously issued with
regard to the handling of checks under the new
Check Image Clearing System or CICS.
- Memo Circular No. 3306 clarifies that the
reminders stated in the Advisories are issued
primarily for the protection of the customers.
Non-conformity with the reminders should not be a
reason for non-acceptance of the checks.
- PCHC specifically states that checks which are
folded or have staple holes should be accepted
by banks as long as the image and the information
on the check are still clearly visible upon unfolding
or inspection.
- Further, checks without the word “only” after the
amount written on the check, with empty spaces not
ruled out, or information not written in dark-colored
ink should not be reasons for non-acceptance by
banks. No standard format on the date on the
checks is required.
- The Bangko Sentral enjoins banks to remain
prudent in implementing the new check clearing
process but at the same time not too rigid in
accepting checks.
- The Bangko Sentral uphold consumer
protection and promotes efficient payment systems
which are ingredients in maintaining financial
stability.
Non-acceptance of checks with
erasure, alteration and/or deficiency
WHAT KINDS OF ERASURE OR ALTERATION
WILL BE COVERED? Erasures or alterations of the
following on the face of the check are covered:
● date
● name of the payee (whether indicated as
"Cash" or "Bearer"
● or "Holder" or a specific name or any other
word or phrase of
● identification
● amount in figures
● amount in words
● signature/s of the Drawer/s or the Drawer's
signatory/ies
● account name
● account number
● check number
 ● MICR characters.
WHEN IS A CHECK CONSIDERED TO
HAVE A “DEFICIENCY” UNDER THIS
NEW REGULATION?
A check is deemed to have a deficiency if one or
more of the following is missing on the face of the
check:
● Date
● payee
● amount payable in figures
● amount payable in words -- except for
● checks issued by banks (Manager's or
● Cashier's Checks, Demand Drafts) using a
check writer; or
● signature/s of the Drawer/s.
MICR
MICR (magnetic ink character recognition) is a
technology used to verify the legitimacy or
originality of paper documents, especially checks.
Special ink, which is sensitive to magnetic fields, is
used in the printing of certain characters on the
original documents.
Returned Checks
● Checks without sufficient funds
– Drawn Against Insufficient Fund – there is not
enough money in the account
– Drawn Against Uncollected Deposits - the account
has sufficient funds but not yet available to the
drawer because the deposit, usually a check, had
not yet been cleared
● Checks with stop payment orders
● Checks dishonored due to technical
reasons – the check is improperly
written/has a deficiency.
● Post-Dated (check has date later than the
current date
● Stale-Dated (check is too old to honor, not
more than 6 months)
● Account Closed – the account holder,
custodian or counterparty terminated the
account
● Account Transferred - changing of one
bank to another bank
● Account Frozen – it may be because
money owed to another individual or
business or any creditor that has a
judgment against the account holder.
R/T NO.
❖ Routing Transit Number
❖ A routing transit number is a nine-digit
number used to identify a bank or financial
institution when clearing funds or
processing checks.
❖ These numbers are also used in online
banking and clearinghouses for financial
transactions.
❖ Routing transit numbers are often used
when setting up a wire transfer or direct
deposit.
DIFFERENT KINDS OF CHECKS
PERSONAL CHECKS
– is a slip of paper that allows you to make
payments from the bank personal account.
MANAGERS CHECKS
– is a cheque issued by the bank, payable to a
payee as indicated by the person who buys the MC.
CASHIERS CHECKS
– is a cheque guaranteed by a bank, drawn on the
bank’s own fund and signed by a cashier.
Commonly required for real estate and brokerage
transactions.
DEMAND DRAFTS
– is a written order issued by the bank to overseas
correspondents to pay a stated amount in US
dollars to a named beneficiary. The bank will pay
the beneficiary when the demand draft is deposited
and cleared by the beneficiary’s bank.
MONEY AND THE PAYMENTS SYSTEM
( PHILIPPINE CURRENCY NOTES AND COINS )
(WEEK 12-14)
Coins and Notes
— The Bangko Sentral ng Pilipinas has the
exclusive power and authority to issue
coins and notes for circulation in the Philippines.
— The BSP has recently launched enhanced
Philippine coins and notes that are more responsive
to the needs of the elderly and the visually impaired,
and feature the latest anti-counterfeiting technology.
— It also issues legal tender commemorative coins
and notes of limited quantity to celebrate or
recognize the significance of a person, place and
event in Philippine history.
The BSP Museum is the repository and custodian of
the country’s numismatic heritage. It collects,
studies and preserves coins, paper notes, medals,
artifacts and monetary items found in the
Philippines during its different historical periods.
The Museum also houses the BSP art collection of
paintings, sculptures, pre-colonial gold and pottery,
and decorative arts.
History of Philippine Money
• PRE-HISPANIC PERIOD
• PRE-COLONIAL PERIOD
• SPANISH ERA
• REVOLUTIONARY PERIOD
• AMERICAN PERIOD
• JAPANESE OCCUPATION
• THE PHILIPPINE REPUBLIC
Pre-Hispanic Era
- Long before the Spaniards came to the
Philippines, trade among the early Filipinos and with
traders from the neighboring lands like China, Java,
Borneo, and Thailand was conducted through
barter. The inconvenience of the barter system led
to the adoption of a specific medium of exchange –
the cowry shells. Cowries produced in gold, jade,
quartz and wood became the most common and
acceptable form of money through many centuries.
- Since the Philippines is naturally rich in gold, it
was used in ancient times for barter rings, personal
adornment, jewelry, and the first local form of
coinage called Piloncitos. These had a flat base that
bore an embossed inscription of the letters “MA” or
“M” similar to the Javanese script of the 11th
century. It is believed that this inscription was the
name by which the Philippines was known to
Chinese traders during the pre-Spanish time.
PRE-COLONIAL GOLD & POTTERY
COLLECTION
• In the Philippines, the 10th to 14th centuries were
years of political, economic, and social progress,
when primary artistic and scientific development
occurred. Unearthed gold ornaments manifest a rich
material culture dating at least 300 years before the
Spanish arrived in our islands.
• Of the metal’s abundance, the Spanish explorers
who landed on the islands in the 16th century
noted, “Pieces of gold, the size of walnuts and
eggs, are found by sifting the earth in the island.”
• As gold was plentiful, ancient Filipinos mastered
gold working and created splendid works of art that
are exquisite demonstrations not only of the skillful
mastery of metallurgy, physics, chemistry, and other
sciences, but also of political, cultural, economic,
religious, and artistic expressions.
• The Bangko Sentral ng Pilipinas presents key
pieces from the BSP Pre-colonial gold collection to
provide insight into a remarkable past and ancestry
that all Filipinos can be proud of.
PILONTICOS - are small cone shaped pallets
considered as the first documented currency in the
philippines. These had a flat base that bore an
embossed inscription of the letters “MA” or “M”
similar to the Javanese script of the 11th century.
DRAGON “TUTUBI” NECKLACE - Fashion raw
materials into fine pieces of wrought gold called for
great skills. This handcrafted necklace is made up
to 6000 - 7000 drops of graduated gold granules.
KANDIT SASH FINIALS - Gold ornamentation was
an indication of status, with the amount of gold on
the person directly to one’s prestige. These finials
or belts are meant to be joined by a cord slipped
through a fold. At the center of each buckle is a
mandala from which graduating energy or power
appears to radiate.
DAGGER HILT - Weapons with gold handles were
used in ceremonies, and gold itself was regarde to
have amuletic properties , an important property in
rituals. The handle design was from Siargao
sun-bird amidst mystical flames.In old Philippines
languages, the sun was also called hari or king.
FOREARMS BANDS - Ancient Filipino exhibited
strong individualism expressed in the multiple parts
of their ornamentations and in the unique details in
their design. It was made of gold sheet edge with
twisted gold wire and tube, pin lock, the motif and
pattern of palmette and rosette suggest early
contact with the west.
MASSIVE PENANNULAR BARTER RINGS - In
ancient times the beret rings called PANIKA and
pallets called piloncitos were used for exchange
within the outside of the tribe and even international
trade. These rings--are big as doughnuts.
KANDIT ROYAL BELT - This Kandit Belt is the
heaviest of seven magnificent gold sashes in the
BSP in Pre-Hispanic Collection. The Kandit is a
symbol of power in traditional societies in Mindanao
to this day. The modern-day Kandit are made of
handwoven silk and other prized materials.
KAMAGE NECKLACE - This long linked up kamagi
necklace is made up of interlocking tooth-like
graduated,short, and spherical beads with serrated
edges. Inspiration by snake spine. The term kamagi
is used among the Bagobo of Mindanao to refer to a
type of necklace made up of interlocking wavy
beads.
ARM BANGLES - The heavy ornaments of pure
gold are a design unique to the Philippines. The
widest bracelet, which is completely hand-forged,is
waisted and features transverse furrowed lines with
thick curved leaves at both sides. These types of
bracelets are heirlooms among highland people of
Kalinga province in Northern Luzon.
PATAN-AW EARRINGS - These dangling
ornaments are called patan-aw earring because
their movements are meant to call attention to the
wearer.
PAIR OF LARGE SQUARE QUATREFOIL
EARRINGS - These large ear ornaments from
mindoro resemble an abstract flower where deft
snips on the sides suggest petals. This design was
important as a symbol of the ancient concept of life.
It also suggests familiarity with Hindu-Buddhist
concepts as well as Chinese mythology.
CONICAL NECKLACE TERMINALS - These pairs
of funnel-like necklace terminals are the biggest pair
in the BSP collection. Their uniqueness lies in
having double guard annexes at the narrow end
with their flaring end strips wrapped and reinforced
around the wire ring.
WAISTCORD FINIALS - The design of these finials
hint at an era of cosmopolitanization, brought about
by cultural exchanges, trade and convention.
Filipino noblemen wearing these ornaments
weighing down a waistcord.
BSP TODAY AND GOLD
-To this day, abundant gold reserves continue to
provide livelihood to hundreds of thousands of
Filipinos, including small scale miners.
-The Bangko Sentral ng Pilipinas continues to
strengthen its gold buying activities by acquiring
from small scale miners at prevailing
international gold buying price, and PhP/USD
buying rate set by the BSP Financial Markets on a
daily basis.
• The BSP also extends its reach through its five
Gold Buying Stations in key locations across the
country.
Spanish Era
1521-1897
-The cobs or macuquinas of colonial mints were the
earliest coins brought in by the galleons from
Mexico and other Spanish colonies. These silver
coins usually bore a cross on one side and the
Spanish royal coat-of-arms on the other.
-The Spanish dos mundos were circulated
extensively not only in the Philippines but the world
over from 1732-1772.
-Treasured for its beauty of design, the coin
features twin crowned globes representing
Spanish rule over the Old and the New World,
hence the name “two worlds.” It is also known as
the Mexican Pillar Dollar or the Columnarias due
to the two columns flanking the globes.
-Due to the shortage of fractional coins, the
barrillas, were struck in the Philippines as ordered
by the Royalty of Spain. The barrilla, a crude
bronze or copper coin worth about one centavo,
was the first coin struck in the country.
-The Filipino term “barya” , referring to small
change, had its origin in barrilla.
-Coins from other Spanish colonies also reached
the Philippines and were counterstamped to
legalize their circulation in the country.
-Gold coins with the portrait of Queen Isabela
were minted in Manila.
-Silver pesos with the profile of young Alfonso XIII
were the last coins minted in Spain. The pesos
fuertes, issued by the country’s first bank, the El
Banco Espanol Filipino de Isabel II, were the first
paper money circulated in the country.
Revolutionary Period
1898-1899
-Asserting its independence, the Philippine
Republic of 1898 under General Emilio Aguinaldo
issued its own coins and paper currency backed by
the country’s natural resources.
At the Malolos arsenal, two types of two-centavo
copper coins were struck.
-One peso and five peso revolutionary notes
printed as Republika Filipina Papel Moneda de
Un Peso and Cinco Pesos were freely circulated.
These were handsigned by Pedro Paterno,
Mariano Limjap and Telesforo Chuidian. With the
surrender of General Aguinaldo to the Americans,
the currencies were withdrawn From circulation
and declared illegal currency.
American Period
1900-1941
-With the coming of the Americans 1898, modern
banking, currency and credit systems were
instituted making the Philippines one of the most
prosperous countries in East Asia.
The Americans instituted a monetary system for the
Philippine based on gold and pegged the Philippine
peso to the American dollar at the ratio of 2:1.
The US Congress approved the Coinage Act for
the Philippines in 1903.
-The coins issued under the system bore the
designs of Filipino engraver and artist, Melecio
Figueroa. Coins in denomination of one-half
centavo to one peso were minted.
The renaming of El Banco Espanol Filipino to
Bank of the Philippine Islands in 1912 paved the
way for the use of English from Spanish in all
notes and coins issued up to 1933.
Beginning May 1918, treasury certificates
replaced the silver certificates series, and a
one-peso note was added.
The Japanese Occupation
1942-1945
-The outbreak of World War II caused serious
disturbances in the Philippine monetary system.
Two kinds of notes circulated in the country during
this period. The Japanese Occupation Forces
issued war notes in high denominations.
-These war notes had no back up reserves, thus,
Filipinos dubbed it “Mickey Mouse” money.
During the worst inflation in Philippine history,
Filipinos would go to the market laden with bayongs
of Mickey Mouse bills, since one duck egg cost 75
pesos, and a box of matches more than 100 pesos.
-On the other hand, Guerrilla Notes or
Resistance Currencies which are in low
denominations, were issued by different provinces
and, in some instances, municipalities through their
local currency boards to show resistance against
the Japanese occupation.
The Philippine Republic
-A nation in command of its destiny is the message
reflected in the evolution of Philippine money under
the Philippine Republic.
Having gained independence from the United
States following the end of World War II, the country
used as currency old treasury certificates
overprinted with the word “Victory”.
-With the establishment of the Central Bank of the
Philippines in 1949, the first currencies issued
were the English series notes printed by the
Thomas de la Rue & Co., Ltd. in England and the
coins minted at the US Bureau of Mint. Ang b
The “Filipinization” of the Republic coins and
notes began in the late 60’s and is carried through
to the present.
In the 70’s, the Ang Bagong Lipunan (ABL) series
notes were circulated, which were printed at the
Security Printing Plant starting 1978.
-A new wave of change swept through the
Philippine coinage system with the Flora and
Fauna Coin Series initially issued in 1983.
The New Design Series of banknotes issued in
1985 replaced the ABL series.
Ten years later, a new set of coins and notes were
issued carrying the logo of the Bangko Sentral ng
Pilipinas.
BSP Coin Series (1995 –
Present)
-In 1995, a new set of coins and notes was issued
which carried the logo of the new BSP: 5- and
1-piso and 25-, 10-, 5- and 1-sentimo. On July 10,
2001, BSP issued the 10-piso coin for general
circulation to commemorate its 8th year
anniversary.
• It has the profiles of Andres Bonifacio and
Apolinario Mabini in a con-joint or in tandem
manner on the obverse side.
• The reverse side bears the seal of the Bangko
Sentral ng Pilipinas which is consistent with the
common reverse design of the other six
denominations.
• This has been an additional denomination to the
current coin circulation and a replacement for the
10-piso NDS banknote.
BSP Coin Series (1995 – Present)

Ten piso

Obverse
25 Sentimo, "Republika ng Pilipinas",
year mark

Reverse
Logo of the Bangko Sentral ng Pilipinas
Obverse
Apolinario Mabini and Andres Bonifacio,
"Republika ng Pilipinas", 10 piso, Year 10 sentimo
Mark

Reverse
Logo of the Bangko Sentral ng Pilipinas

Five piso

Obverse
10 Sentimo, "Republika ng Pilipinas", year
mark

Reverse
Logo of the Bangko Sentral ng Pilipinas
Obverse
5 sentimo
Emilio Aguinaldo, "Republika ng Pilipinas",
5 Piso, year mark

Reverse
Logo of the Bangko Sentral ng Pilipinas

1 piso

Obverse
5 Sentimo, "Republika ng Pilipinas", year
mark

Reverse
Logo of the Bangko Sentral ng Pilipinas
Obverse
Jose Rizal, "Republika ng Pilipinas", 1 Piso,
year mark

Reverse
Logo of the Bangko Sentral ng Pilipinas 1 sentimo

25 sentimo
 circulated under the BSP’s NGC Coin Series. The
bi-color 20-Piso coin retains major elements of the
20-peso banknote.

- The obverse side of the coin features Manuel L.

Quezon, while the reverse side shows the BSP
logo, the Malacañan Palace, and the Nilad plant.

WHY BSP CREATED/ISSUED THE 20-PISO

Obverse
COIN?
1 Sentimo, "Republika ng Pilipinas", year
mark
NEW GENERATION CURRENCY BANKNOTE
SERIES (2010-present)
Reverse
Logo of the Bangko Sentral ng Pilipinas
- In 1995, a new set of coins and notes was issued.

- in 2009, the Bangko Sentral ng Pilipinas

New Generation Currency Coin Series
announced that it launched a massive redesign for
current banknotes and coins to further enhance
- On 26 March 2018, the BSP released the New
security features and improve durability.
Generation Currency (NGC) Coin Series comprising
the 10-Piso, 5-Piso, 1-Piso, 25-Sentimo, 5-Sentimo
- The members of the numismatic committee
and the 1-Sentimo into circulation.
include Bangko Sentral Deputy Governor Diwa
Guinigundo and Dr. Ambeth Ocampo Chairman
- These NGC coins feature three national heroes
of the National Historical Institute.
(Apolinario Mabini in the 10-Piso, Andres Bonifacio
in the 5-Piso and Jose Rizal in the 1-Piso), a
- The new banknote design features famous
stylized three stars and a sun in the 25-, 5- and
Filipinos and iconic natural wonders.
1-Sentimo, the BSP logo, and endemic flora
consistent with the design of the NGC Banknote
- Philippine national symbols will be depicted on
Series that highlights Philippine fauna.
coins.
- The NGC Coin Series and the BSP Coin-Ed
- To provide a smooth transition from the New
Campaign were among the top three finalists in the
Design Series to New Generation Currency series,
Best New Circulating Coins and Best Public
BSP purposely retained some NDS features, such
Education Program categories, respectively,
as, the size, predominant colors and the featured
awarded by the International Association of
personalities in the NGC, except for the portrait of
Currency Affairs (IACA) during the Excellence in
President Corazon Aquino which is an added
Currency 2019 Coin Awards at the biennial Coin
portrait on the 500-piso note.
Conference in Rome, Italy on 15 October 2019.

- The BSP started releasing the initial batch of new

- In particular, micro-printed details using laser-
banknotes on December 16, 2010.
engraving technology were included in the 20-Piso,
10-Piso and 5-Piso, which makes it difficult for
- The NGC will co-exist with the NDS approximately
these coins to be duplicated using traditional coin
until 2014, while BSP is building up its capability to
counterfeiting methods.
print and produce NGC banknotes with the latest
anti- counterfeiting security features incorporated
- The metallic composition of the NGC coins also
through advanced technologies, benchmarked
discourages the illegal practice of hoarding large
worldwide.
quantities of coins for the extraction of their metal
Content.
- Color plays an important part in the design,
accentuating key elements such as value numerals,
- The BSP enjoins the public to properly use and
seals and note edges.
recirculate our Philippine coins for their economic
and cultural value.
- The inclusion of large intaglio printed numbers
on thefront differentiates each denomination to
- On 17 December 2019, the BSP released the new
provide assistance for the visually impaired.
20-Peso NGC coin and the enhanced 5-Piso NGC
coin with nine sides which are the latest to be

Polymer 1000-Piso Banknote
(BSP and NPA Partnership)
The Bangko Sentral ng Pilipinas (BSP) has
partnered with Note Printing Australia (NPA), a
subsidiary of the Australian central bank, in the
initial roll-out of modern polymer banknotes. During
a high-level event at the Manila residence of
Australian Ambassador to the Philippines Steven J
Robinson AO (left, above), BSP Governor Benjamin
E. Diokno (center) received uncut 1000- Piso
polymer banknotes from NPA Chief Executive
Officer Malcolm McDowell (right), witnessed by BSP
and Australian Embassy officials, as well as leaders
from the Philippine banking industry.
(Featured Philippines Eagle)
The Philippine Eagle is currently featured on the
new 1000-Peso polymer banknote to celebrate our
country’s rich flora and fauna. Floyd Bermejo is the
wildlife photographer who captured the image of the
Philippine Eagle used in the new polymer banknote.
He hopes that his photo will inspire people to
protect and save the Philippine Eagle from
extinction.
(Circulation of 1000-Piso polymer banknote)
The Bangko Sentral ng Pilipinas (BSP) has started
issuing the 1000-Piso polymer banknote this April
2022 with ten million pieces ready for circulation. By
2023, the BSP also expects that 500 million pieces
of 1000-Piso polymer banknotes will be in
circulation by 2023, alongside the existing
1000-Piso paper banknotes.
MUTILATED AND UNFIT NOTES
UNFIT NOTES
- Faded Print (pagkupas ng kulay)
- Soilage (karumihan)
- Crumples of heavy folds
- Stains and markings
- Tear , hole or missing parts
- Charring or decay (burn or damage)
- Adhesive or stapler
- Splitting of substrate ( mga nakadikit)
COMMEMORATIVE NOTES AND COINS
- Numismatics - is the science, study and
collection of coins, tokens, medals, decorations,
paper notes, and other items used as money. It is
derived from the Greek word “nomisma” which
means coin.
- The Bangko Sentral ng Pilipinas Money
Museum as the repository of the country’s most
valuable numismatic pieces is the first of its kind in
Southeast Asia. It was established on 3 January
1974.
- Commemorative notes are being issued by the
Bangko Sentral ng Pilipinas (BSP) to memorialize
an event of historic significance to the country.
- Usually, these are in limited volume, set apart from
the banknotes intended for circulation and
overprinted with an emblem or text descriptive of
the theme or occasion being celebrated.
- In 1998, when the Philippines celebrated 100
years of independence from Spanish rule, the BSP
issued commemorative notes specially designed`for
the occasion which were made bigger than the
circulation notes.
- In fact, the 100,000-piso Centennial
Commemorative Note was recorded as the largest
banknote in 1998 in the Guinness Book. The
following are the commemorative banknotes which
the BSP has issued since 1990:
DEMONITIZATION
(week 15)
Demonetization of the Old Banknote Series
Demonetization is the process by which a central
bank removes the monetary value of a legal tender
currency it issues. Demonetized currencies are no
longer accepted as payment for goods and
services.
Demonetization of the Old Banknote Series
The process of demonetization is widely practiced
throughout the world, though reasons for
demonetizing can be varied. Among the common
reasons are the following:
– The prevention of counterfeiting
– Benchmarking with other countries
– A change in the type or form of government
– A change in the type of currency as part of
political or social reform
– Redefining the value of money in response to
hyperinflation
– Shift to a single design series of currency in
countries where more than one series are in
circulation

• The BSP is demonetizing the old banknote series

as a way to safeguard the integrity of our currency.
• As a matter of practice, central banks around the
world change the design of their currencies that
have been in circulation for over 10 years.
• In the case of the Philippines the old banknote
series, introduced in 1985 or 30 years ago, is being
replaced by the New Generation Currency (NGC)
series which was launched in 2010.
• Demonetization is within the BSP’s jurisdiction as
stated in RA No. 7653, or The New Central Bank
Act.
• The Bangko Sentral may call in for replacement of
notes of any series or denomination which are
more than five (5) years old and coins which are
more than ten (10) years old.
• Notes and coins called in for replacement in
accordance with this provision shall remain legal
tender for a period of one year from the date of
call.
• After this period, they shall cease to be legal
tender but during the following year, or for such
longer period as the Monetary Board may
determine, they may be exchanged at par and
without charge in the Bangko Sentral and by agents
duly authorized by the Bangko Sentral for this
purpose.
DEMONETIZED COINS AND NOTES
DEMONETIZED NOTES
• When the American liberation forces arrived in
1944, they brought the currency called the Victory
Series No. 66.
• With the creation of the Central Bank of the
Philippines in 1949, came the issuance of the
English Series.
• They were in denominations 1, 2, 5, 10, 20, 50,
100, 200 and 500 pesos; all bearing portraits of
Filipino heroes on the obverse, vignettes in
Philippine history on the reverse, and worded in
English language.
• On the other hand, all denominations of the
Victory Series No. 66 were overprinted with
“Central Bank of the Philippines” on the reverse
side, and remained legal tender until July 30, 1964

• After the expiration of this latter period, the notes

and coins which have not been exchanged shall
cease to be a liability of the Bangko Sentral and
shall be demonetized.
• The Bangko Sentral shall also demonetize all
notes and coins which have been called in and
replaced.

DEMONETIZED NOTES
• The two highest denominations of the English
Series were later withdrawn from circulation on
December 31, 1957, pursuant to R.A. No. 1516.
Only notes of 1 up to 50 pesos continued to be
printed until 1961.
• Small-denomination notes were also printed from
1951 through 1957 (5-, 10-, 20- and 50-centavos) to
replace the US-Filipinas metallic coins.
• In 1955, the Half-Peso note of bigger dimensions
also went into circulation.
• On January 5, 1970, these small notes ceased to
be legal tender. Pursuant to Presidential Decree No.
378, all banknotes of the English Series were
considered demonetized after
February 28, 1974.
Pilipino Series Banknotes (1969-1974)
• To complete the Filipinization of Philippine
currency, the Central Bank started to issue the
series of multi-colored Central Bank notes worded
in Pilipino and similarly bearing the portraits of
Filipino heroes on the reverse, and vignettes in
Philippine history on the reverse toward mid-1969.
• This series called Pilipino series came in
denominations 1, 5, 10, 20, 50 and 100. The first
five notes have been widely circulated while the
issuance of the 100-piso bills was limited. Together
with the English Series, this Pilipino Series was
considered demonetized after February 28, 1974
pursuant to PD 378.
Ang Bagong Lipunan Series (1973-1993)
• The Ang Bagong Lipunan (ABL) series was issued
by the Central Bank of the Philippines in line with
Presidential Decree No. 168 dated April 2, 1973.
• The Ang Bagong Lipunan (literally means New
Society) legend overprinted on the banknotes was
meant to symbolize then President Marcos’ New
Society which marked the era of reforms on social,
economic and political structure of thegovernment.
• This legend was the main difference in the design
between ABL and Pilipino series. The lowest
denomination in the ABL series was 2-piso and the
highest was 100-piso. The 2-pisodenomination
carried the design elements of the 1-piso Pilipino
series. The ABL banknote series was considered
demonetized after February 2, 1996.
Flora and Fauna Series (1983 – 1998)
• The Flora and Fauna series was introduced in
1983 which included 2-piso coins.
• The coins featured portraits of renowned Filipino
patriots and heroes on the obverse and rare
species of fauna, flora and marine life indigenous to
the Philippines were represented on the reverse.
• This series circulated simultaneously with 10-
centavo English, all denominations of Pilipino and
Ang Bagong Lipunan series.
Improved Flora and Fauna Series
(1991 – 1998)
• The sizes of the coins were reduced in 1991 thus
the Flora Fauna Series was renamed Improved
Flora and Fauna.
• Along with this improvement was the introduction
of 5-piso coin to replace the 5- piso banknote and
save on the cost of printing considering that 5-piso
banknote was the most widely circulated
denomination.
• Other denominations of the Flora and Fauna such
as the 50-, 10-, 5- and 1-sentimo were not anymore
improved.
• This series together with the 10-centavo English,
all denominations of Pilipino, Ang Bagong Lipunan
and Flora and Fauna were considered demonetized
after January 2, 1998.
New Design Series (NDS)
(1985-2017)
• When Martial Law was lifted in 1981, the Central
Bank started to print and mint an entirely new series
of Philippine currency notes and coins which are
contemporary and forward looking, adopting the
latest trend of anti-counterfeiting features.
• On June 12, 1985, the BSP issued the New
Design Series starting with the 5-piso banknote with
the face of Emilio Aguinaldo on the obverse side.
• The following month, the 10-piso banknote with
the face of Apolinario Mabini on the obverse side
was issued. In early 1986, a new 20-piso banknote
appeared.
• In early 1986, a new 20-piso banknote appeared.
After the 1986 People Power Revolution and the
new 1987 Constitution was promulgated, the
500-piso banknote with the face of Benigno Aquino,
Jr. on the obverse side was introduced.
• In 1991, the BSP issued for the first time a 1000-
piso banknote, containing on the obverse side the
composite portraits of Jose Abad Santos, Josefa
Llanes Escoda and Vicente Lim.
• The second major political upheaval called EDSA
II in 2001 was depicted on the reverse side of the
200-piso showing Gloria Macapagal-Arroyo being
sworn into office at the EDSA Shrine. She is the first
president whose image has been included in a
banknote while in office.
• On the obverse side of the banknote is the portrait
of his father, Diosdado Macapagal.
• The 200-piso NDS which was issued in 2002, was
the last denomination to be added in the series.
• In the NDS, the country’s social and political
development and economic achievements were
highlighted.
• The design was made more distinctly Pilipino
through the adoption of ethnic designs at the
background of all the denominations instead of the
embellishing lacework patterns from western culture
that were depicted in the earlier series.
• The seal of the Central Bank of the Philippines in
the obverse and the size of the Pilipino series had
been retained.
• After the passage of the New Central Bank Act of
1993, the New Design Series bears the new seal of
the Bangko Sentral ng Pilipinas.
• In the latter part of 1997, the revised 10-piso
banknote, with portraits of Apolinario Mabini and
Andres Bonifacio on the obverse side, was issued.
• In 1998, the 100,000-piso Centennial banknote,
measuring 8.5"x14", accredited by the Guinness
Book of World Records as the world's largest legal
tender note was issued in a limited quantity of 1000
pieces to commemorate the celebration of the
Centennial of Philippine Independence.
• Along with this was the launching of the 2000-
piso Centennial Note, measuring 216 mm x 133 mm
and bearing the signature of President Joseph E.
Estrada, on December 1, 1998. Also, in 1998, the
year of printing was added at the bottom of the
denomination value located at the upper left corner
of the obverse.
• In 1999, the names of the signatories on the bills
were added starting with banknotes featuring the
signature of President Joseph Estrada.
• During the Estrada Administration, the practice in
use since the Commonwealth, of reproducing the
signature of the President of the Philippines over
the legend "President of the Philippines" was
abandoned in favor of explicitly stating the
president's name.
• Meanwhile, in the latter part of 1990’s, colored
reproduction machines became available in
commercial quantity and has become a big threat to
the integrity of the currency.
• As a result, in 2001, BSP decided to enhance the
security features of the of 1000, 500, and 100-piso
banknotes, including the 200-piso which was issued
in 2002, by incorporating the iridescent band and
the windowed security thread to combat
counterfeiting made out of colored copiers.
 OPERATION OF FOREIGN BANKS

Entry and Scope of Operations of Foreign

Banks in the Philippines

• Pursuant to Monetary Board Resolution No.

1794 dated 6 November 2014 providing for the
rules and regulations to implement RA No. 10641
(An Act Allowing the Full Entry of Foreign Banks in
the Philippines, Amending for the Purpose RA No.
7721), certain provisions were amended in the
Manual of Regulations for Banks (MORB):

MODES OF ENTRY OF FOREIGN BANKS

In the case of foreign banks, they may operate in
the Philippines through any one (1) of the following
modes of entry:
Mode 1: By acquiring, purchasing or owning up to
100% of the voting stock of an existing domestic
bank.​
Mode 2: By investing in up to 100% of the voting
stock of a new banking subsidiary incorporated in
the Philippines.​
Mode 3: By establishing branches with full banking
authority.

APPLICATION
• Interested foreign banks shall file with the Office of
the Governor, Bangko Sentral, their application for
authority to operate in the Philippines through any
of the modes of entry mentioned above.

QUALIFICATION REQUIREMENTS
in addition to satisfying the criteria prescribed
under Subsec. X105.3, be -
(1) Widely-owned and publicly-listed in the country
of origin, unless the foreign bank applicant is owned
and controlled by the government of its country of
origin.
(2) Established, reputable and financially sound.

DEMONETIZED COINS

● English Series (1958 – 1966)

● Pilipino Series (1969 - 1974)
● Ang Bagong Lipunan (1975 - 1982)
● Flaura and Fauna Series (1983 – 1991)
● mproved Flora and Fauna Series (1992 -
1994)
 the foreign bank. Consideration shall be given to the
countries of origin of applicant foreign banks –
(1) With substantial financial assistance to, and
loans and investments, past and present, in the
Philippines; and
(2) With which the Philippines has significant
volume of trade especially to those with which the
country has substantial net exports.

c. Relationship between the applicant bank and the

Philippines. Consideration shall be given to the
capability of the foreign bank to promote trade with,
and to bring foreign investments into, the
Philippines. Long standing financial and commercial
relationship with, and assistance extended to, the
Philippines, shall likewise be taken into account

d. Demonstrated capacity, global reputation for

financial innovations and stability in a competitive
environment of the applicant bank.

e. Reciprocity rights enjoyed by Philippine banks in

the applicant’s country. Subject to the host country’s
rules and regulations of general application,
Philippine banks should have the opportunity to
establish operations in the foreign bank applicant’s
home country

f. Willingness to fully share banking technology.

CAPITAL REQUIREMENTS
a. For locally incorporated subsidiaries. A foreign
bank subsidiary shall comply with the minimum
capital and prudential capital ratios applicable to
domestic banks of the same category as prescribed
under prevailing regulations

b. For foreign bank branches

(1) A foreign bank branch shall comply with the
minimum capital and prudential capital ratios
applicable to domestic banks of the same category
as prescribed under prevailing regulations.

(2) For purposes of compliance with minimum

capital regulations, the term “capital of a foreign
bank branch” shall refer to the sum of: (i)
GUIDELINES FOR SELECTION
permanently assigned capital, (ii) undivided profits,
The following factors shall be considered in
and (iii) accumulated net earnings, which is
selecting the foreign banks which will be allowed to
composed of unremitted profits not yet cleared
enter the Philippine banking system through R.A.
remittance and losses in operations, less capital
No. 7721, as amended by R.A. No. 10641:
adjustments as may be required by the Bangko
a. Geographic representation and complementation.
Sentral in accordance with prevailing rules and
Representation from the different parts of the world
regulations of general application.
and/or the international financial centers shall be
ensured.
(3) Permanently assigned capital shall be inwardly
remitted and converted into Philippine currency at
b. Strategic trade and investment relationships
the exchange rate prevailing at the time of
between the Philippines and the home country of
remittance.

(4) Any Net due from head office, branches,
subsidiaries and other offices outside the
Philippines, excluding accumulated net earnings,
shall be a deductible adjustment to capital.
(5) For purposes of compliance with the Single
Borrower’s Limit (SBL), the capital of a foreign bank
branch, subject to prescribed adjustments, shall be
synonymous to its “net worth”
HEAD OFFICE GUARANTEE
The head office of foreign bank branches shall
guarantee prompt payment of all liabilities of its
Philippine branches, as well as the observance of
the constitutional rights of the employees of such
branches.
SCOPE OF AUTHORITY
Subsidiaries and branches of foreign banks for
locally incorporated subsidiaries of foreign banks as
well as branches with full banking authority shall be
allowed to perform the same functions and enjoy
the same privileges of, and be subject to the same
limitations imposed upon, a Philippine bank of the
same category.
Privileges shall include the eligibility to operate
under a universal banking authority subject to
compliance with existing rules and regulations and
the guidelines.
CONTROL OF RESOURCES
The Monetary Board shall adopt such measures as
may be necessary to ensure that at all times the
control of sixty percent (60%) of the resources or
assets of the entire banking system is held by
domestic banks, which are majority-owned by
Filipinos. Said measures may include –
a. Suspension of entry of additional foreign bank
subsidiaries and branches; and
b. Suspension of license upgrade or conversion to
subsidiary of existing foreign bank branches.
CHANGE OF MODE OF ENTRY
Foreign banks which are operating in the
Philippines may apply for conversion of their mode
of entry.
The bank shall comply with all applicable
requirements and submit an acceptable transition
plan which shall address how the foreign bank shall
implement the change in mode of entry.
EQUAL TREATMENT
Any right, privilege or incentive granted to foreign
banks or their subsidiaries or affiliates under R.A.
No. 7721, as amended by R.A. No. 10641 shall be
equally enjoyed by, and extended under the same
conditions, to domestic banks.
INTERNATIONAL BANKING
1. History of International Banking
2. The Globalization of Banking
3. The Future of Banks
INTERNATIONAL BANKING
● A conceptual framework for understanding
international banking
● Introduction and discussion of data
sources
● Stylized facts on the current state of
international banking
● Conclusions and upcoming policy
challenge
A Brief Historical Perspective on International
Banking
● Early banks from the 15th century Italian
city-states and their “foreign” branch
networks
● Emergence of German merchant banks in
the 16th century financing trade, industry
and foreign sovereigns by raising funds
from the money markets in Antwerp
● Dutch banks and early examples of
syndicated loans and securities
underwriting in the 17th and 18th centuries
● The first wave of globalization (late 19th
century) and the rise of modern global
banks in the 20th century

A Conceptual Framework: Basics
• Banks provide many important functions that
facilitate economic activity (Levine, 1997)
– Resource allocation
– Diversification of risks
– Mobilizing and pooling savings
– Exerting corporate governance
– Facilitating the exchange of goods and services
• Banks expand their activities into other countries
to further diversify risk, to realize higher profit
margins, and to achieve economies of scale (Cull
and Martinez Peria,2010)
• International banking flows interact with other
types of flows (e.g. FDI, deepening local capital
markets
INTERNATIONAL BANKS
• is a financial institution that is based in a foreign
location and provides services to clients from
around the world.
• provide services and support that is familiar to
anyone who has maintained any type of bank
account.
• a banking institution that operates overseas and
actively manages foreign accounts.
• a financial entity that offers international
companies and individual clients financial
services, such as payment accounts and lending
opportunities.
• operate under its own policies that outline how
they conduct their particular business.
• an international organization that connects
individual customers and companies to various
international banking systems.
• they tend to offer varied services to companies &
those wealthy individuals (typically individual clients
with $100,000 accounts).
• some international banks, specifically banks in
Switzerland, offer their services to customers of any
income bracket.
TYPES OF INTERNATIONAL BANK
● offshore private bank,
● correspondent banks,
● offshore banking centers, and
● subsidiary banks
WHY WOULD A BUSINESS OR AN INDIVIDUAL
OPEN AN INTERNATIONAL ACCOUNT?
ADVANTAGE OF INTERNATIONAL BANK
ACCOUNT
• help facilitate international business (proposals,
lending, or investment strategies executed in
foreign countries);
• store home country’s currency or income to take
advantage of low or no rates and taxes;
• want to build up financial reserves while taking
advantage of excellent interest rates;
• Those who want to expand their investment
portfolios to include international investments may
find going through an offshore bank is a smart
move.
• to keep individual funds safe from lawsuits or
other legal actions.
ADVANTAGE OF INTERNATIONAL BANK
ACCOUNT
Those who want to expand their investment
portfolios to include international investments may
find going through an offshore bank is a smart
move.
When the goal is to set aside funds specifically
for retirement, opting for offshore accounts is a
great idea.
ADVANTAGE OF INTERNATIONAL BANK
ACCOUNT
Even business owners who want to establish a
presence that makes it easier to conduct business
on an international scale may find that offshore
accounts are a better option.
Benefits from Opening an Offshore Bank
Account
● Competitive Interest Rates
● Easy Online Management
● With the Best in Security Measures
● Protection From Political and Market
Upheavals
● Safeguard Against Legal Troubles at
Home
● A Wider Range of Investment
Opportunities
● Possibly Superior Rates of Exchange
When You Travel
OPENING ACCOUNT CONSIDERATIONS
• Banking laws, in terms of building wealth, vary
from one nation to the next.
• consider banking options in nations with a proven
track record of political and economic stability -
provide a reasonable amount of protection for
depositors.
• access to the accounts also matters; the ability to
manage them online as well as in person is a plus.
• The return on the account balances is competitive
and somewhat consistent.
• know transaction fees, limits on transaction totals
per business day, and the options for customer
service and support available.
TYPES OF BANKING SERVICES
● Checking and savings accounts with
interest if maintained over a certain
balance
● provide debit cards for checking accounts,
allowing you to access your funds at will
● time deposit and different forms of
investment accounts
International Bank Account Number
• is a system that enables a financial institution to
recognize a particular bank account regardless of
where the account resides.
• The system was developed to enable the process
of managing transactions that involved bank
accounts connected with banks that were not
located in the country.
Managing Your International Bank Accounts
• ensure knowledge of what policies and
procedures need to follow.
• value of online access - banking any time of the
day or night.
E-BANKING
E-BANKING (INTERNET BANKING, WEB
BANKING, VIRTUAL BANKING, OR ONLINE
BANKING
• All forms of banking services and transactions
performed through electronic means.
• E-banking includes the systems that enable
financial institution customers,individuals or
businesses, to access accounts,transact business,
or obtain information on financial products and
services through a public or private network,
including the internet.
E-BANKING
• Electronic banking is a form of banking in which
funds are transferred through an exchange of
electronic signals rather than through an exchange
of cash, checks, or other types of paper documents.
• Transfers of funds occur between financial
institutions such as banks and credit unions.
• They also occur between financial institutions and
commercial institutions such as stores. Whenever
someone withdraws cash from an automated teller
machine (ATM) or pays for groceries using a debit
card (which draws the amount owed to the store
from a savings or checking account), the funds are
transferred via electronic banking.
• Electronic banking relies on intricate computer
systems that communicate using telephone lines.
• These computer systems record transfers and
ownership of funds, and they control the methods
customers and commercial institutions use to
access funds.
• A common method of access (or identification) is
by access code, such as a personal identification
number (PIN) that one might use to withdraw cash
from an ATM.
WHEN DID IT BEGIN
• In the 1950s the Bank of America was one of the
first institutions to develop the idea that electronic
computers could take over the banking tasks of
handling checks and balancing accounts, which
was, at that time, extremely labor-intensive.
• Other institutions gradually joined the effort and
progressed away from using paper checks and
toward all-electronic banking.
• Data-processing machines, robotic document
sorting, and the invention of optical character
recognition (a computer application that translates
handwritten or typewritten words into text that can
be machine-edited) were a few of the developments
which allowed this evolution.
• The first electronic banking machines were able to
keep records of deposits and withdrawals from each
client, make account balance information available
instantaneously, monitor overdrafts, stop payments,
and hold funds.
/
WHEN DID IT BEGIN
• Electronic banking laid the groundwork for speed
and convenience in individual and commercial
(business) banking.
• The spread of personal computer use has added
another layer of convenience and speed to the
HOW IT WORKS
• When funds are transferred between accounts by
electronic means, it is called an electronic funds
transfer (EFT).
• The Electronic Fund Transfer Act, passed by the
federal government in 1978, established that an
electronic funds transfer is any financial transaction
that originates from a telephone, electronic terminal,
computer, or magnetic tape (storage tape of the
sort used in video or audio cassettes).
• Electronic bill payment and presentment
(EBPP) is a process that companies use to collect
payments electronically through systems like the
Internet, direct-dial access, and Automated Teller
Machines (ATMs).
• It has become a core component of online banking
at many financial institutions today. Other
industries—including insurance providers,
telecommunications companies, and
utilities—depend on EBPP services as well.
IMPORTANCE OF E-BANKING
Banks
• Lesser transaction costs – electronic
transactions are the cheapest modes of transaction
• A reduced margin for human error – since the
information is relayed electronically, there is no
room for human error
• Lesser paperwork – digital records reduce
paperwork and make the process easier to handle.
Also, it is environment-friendly.
• Reduced fixed costs – A lesser need for
branches which translates into a lower fixed cost.
• More loyal customers – since e-banking services
are customer-friendly, banks experience higher
loyalty from its customers.
Customers
• Convenience – a customer can access his
account and transact from anywhere 24x7x365.
• Lower cost per transaction – since the customer
does not have to visit the branch for every
transaction, it saves him both time and money.
• No geographical barriers – In traditional banking
systems,
geographical distances could hamper certain
banking transactions. However, with e-banking,
geographical barriers are reduced.
IMPORTANCE OF E-BANKING
Businesses
• Account reviews – Business owners and
designated staff members can access the accounts
quickly using an online banking interface. This
allows them to review the account activity and also
ensure the smooth functioning of the account.
• Better productivity – Electronic banking
improves productivity. It allows the automation of
regular monthly payments and a host of other
features to enhance the productivity of the
business.
• Lower costs – Usually, costs in banking
relationships are based on the resources utilized. If
a certain business requires more assistance with
wire transfers, deposits, etc., then the bank charges
it higher fees. With online banking, these
expenses are minimized.
• Lesser errors – Electronic banking helps reduce
errors in regular banking transactions. Bad
handwriting, mistaken information, etc. can cause
errors which can prove costly. Also, easy review of
the account activity enhances the accuracy of
financial transactions.
• Reduced fraud – Electronic banking provides a
digital footprint for all employees who have the right
to modify banking activities. Therefore, the business
has better visibility into its transactions making it
difficult for any fraudsters to play mischief.
ADVANTAGES OF ONLINE BANKING
• Convenience is a major advantage of online
Banking.
● Basic banking transactions such as paying
bills and transferring funds between
accounts can easily be done 24 hours a
day, seven days a week, wherever a
consumer wishes.
• Online banking is fast and efficient.
● Funds can be transferred between
accounts almost instantly, especially if the
two accounts are held at the same
institution. Consumers can open and close
a number of different accounts online, from
fixed deposits to recurring deposit
accounts that typically offer higher rates of
interest.
• Consumers can also monitor their accounts
regularly closely, allowing them to keep their
accounts safe. Around-the-clock access to banking
information provides early detection of fraudulent
activity, thereby acting as a guardrail against
financial damage or loss.
DISADVANTAGES OF ONLINE BANKING
• For a novice online banking customer, using
systems for the first time may present challenges
that prevent transactions from being processed,
which is why some consumers prefer face-to-face
transactions with a teller.
• Online banking doesn't help if a customer needs
access to large amounts of cash. While he may
be able to take a certain amount at the ATM—most
cards come with a limit—he will still have to visit a
branch to get the rest.
• Although online banking security is continually
improving, such accounts are still vulnerable when
it comes to hacking. Consumers are advised to use
their own data plans, rather than public Wi-Fi
networks when using online banking, to prevent
unauthorized access.
• Additionally, online banking is dependent on a
reliable Internet connection. Connectivity issues
from time to time may make it difficult to determine
if banking transactions have been successfully
processed.
RISKS OF E-BANKING
Operational Risk
Operation risk or transactional risk is the most
common type of risk of e-banking. It includes:
• Incorrect transaction processing
• Compromises in the integrity of data, data privacy,
and confidentiality
• Unauthorized access to the bank’s systems
• Non-enforceability of contracts, etc.
Security Risk
• When we talk about banking transactions, security
of the transaction is of paramount importance. All
customers want their transactions to be confidential.
• However, since all information is online, there is
always a chance that someone might retrieve the
information and misuse it. The security risk of
e-banking also arises from hacking threats and
unauthorized access to the bank’s systems.
Reputational Risk
• For any business, its reputation is of critical
importance. When it comes to electronic banking, if
a bank fails to perform critical functions or not work
according to the expectations of its customers, then
it faces a risk of loss of reputation. This eventually
leads to a loss of funding or customers.
• Some reasons for this risk are a system or product
not functioning as expected, significant deficiencies
in the system, security breaches (external or
internal), misinforming customers about the
processes and policies of using e-banking, certain
communication issues that hinder the customer
from accessing his account, etc.
Legal Risk
• Whenever there is a violation of laws, regulations,
or prescribed practices, or when the legal rights and
obligations of any of the parties to a transaction are
not established, then there is a legal risk involved.
• E-Banking is relatively new to the industry and
there is a lot of uncertainty and ambiguity about
certain laws and rules. This increases the legal risk.
Money Laundering Risk
• All transactions through the e-banking channel are
done remotely. Therefore, it is difficult for banks to
use traditional methods to detect and prevent
criminal activities.
• While there are certain money laundering rules in
place, for electronic payments, their feasibility is
questionable.Therefore, banks carry the risk of
money laundering.
Cross-border Risks
The core idea of electronic banking is to extend
the geographical reach of both banks as well as
customers. This means that the expansion can go
beyond national borders. This leads to several
cross-border risks:
• Legal and Regulatory risks – There is a
possibility about uncertainties
regarding the legal requirements in certain countries
and jurisdiction
ambiguities of different national authorities.
• Operational risk – If the bank uses a service
provider located in a different
country, then it is difficult to monitor it causing
operational risk.
• Credit risk – Cross-border transactions can
increase credit risk. This is because
it is difficult to appraise an application for a loan
from a customer in a
different country.
Strategic Risk
This risk is associated with issues pertaining to:
• The development of a business plan
• Having sufficient resources available to support
the business plan
• In the case of outsourced activities, the credibility
of the vendor
• For employees, any change in the work
environment
• Level of technology used in comparison with the
available technology, etc.
Other Risks
• The other risks of e-banking are the same as
those of traditional banking like credit risk, liquidity
risk, interest rate risk, market risk, etc. However, in
e-banking, these risks are magnified due to the
use of electronic channels and the absence of
geographical boundaries.
• All the risks mentioned above can arise due to
some flaws in design, insufficient technology,
negligent employees, and unauthorized system
access (intentional or not). Therefore, it is important
that banks adopt the right technology and systems
and have proper access control for a secure
transacting environment.
TYPES OF E BANKING
• Level 1 – This is the basic level of service that
banks offer through their websites. Through this
service, the bank offers information about its
products and services to customers. Further, some
banks may receive and reply to queries through
email too.
• Level 2 – In this level, banks allow their customers
to submit instructions or applications for different
services, check their account balance, etc.
However, banks do not permit their customers to do
any fund-based transactions on their accounts.
• Level 3 – In the third level, banks allow their
customers to operate their accounts for funds
transfer, bill payments, and purchase and redeem
securities, etc.
TWO TYPES OF BANKING WEBSITES
1. Informational Websites – These websites offer
general information about the bank and its products
and services to customers.
2. Transactional Websites – These websites allow
customers to conduct transactions on the bank’s
website. Further, these transactions can range from
a simple retail account balance inquiry to a large
business-to-business funds transfer. The following
table lists some common retail and wholesale
e-banking services offered by banks and financial
institutions:
COMMON E-BANKING SERVICES
The Philippine E-banking system
E-MONEY
shall mean monetary value as represented by a
claim on its issuer, that is –
a. electronically stored in an instrument or device;
b. issued against receipt of funds of an amount not
lesser in value than the monetary value issued;
c. accepted as a means of payment by persons or
entities other than the issuer;
d. withdrawable in cash or cash equivalent; and
e. issued in accordance with the Section in MORB.
ELECTRONIC MONEY ISSUER (EMI)
Electronic money issuer (EMI) shall be classified
as follows:
a.Banks (hereinafter called EMI-Bank);
b.NBFI supervised by the Bangko Sentral
(hereinafter called EMI-NBFI); and
c.Non-bank institutions registered with the Bangko
Sentral as a monetary transfer agent under Sec.
4511N of the MORNBFI (hereinafter
called EMI-Others).
ELECTRONIC INSTRUMENTS OR DEVICES
Electronic instruments or devices shall mean
cash cards, e-wallets accessible via mobile phones
or other access device, stored value cards, and
other similar products.
E-money issued by banks shall not be considered
as deposits.
Electronic Banking Services and Operations
ELECTRONIC BANKING APPLICATION
Banks wishing to provide and/or enhance existing
electronic banking services shall submit to the BSP
an application describing the services to be
offered/enhanced and how it fits the bank’s overall
strategy.
This shall be accompanied by a certification
signed by its president or any officer of equivalent
rank and function to the effect that the bank has
complied with the following minimum pre-conditions:
a. An adequate risk management process is in
place to assess, control, monitor and respond to
potential risks arising from the proposed electronic
banking activities;
b. A manual on corporate security policy and
procedures exists that shall address all security
issues affecting its electronic banking system,
particularly the following:
(b.1) Authentication - establishes the identity of
both the sender and the receiver; uses trusted third
parties that verify identities in cyberspace;
(b.2) Non-repudiation - ensures that transactions
can not be repudiated or presents undeniable proof
of participation by both the sender and the receiver
in a transaction;
(b.3) Authorization - establishes and enforces the
access rights of entities (both persons and/or
devices) to specified computing resources and
application functions; also locks out unauthorized
entities from physical and logical access to the
secured systems;
(b.4) Integrity - assures that data have not been
altered; and
(b.5) Confidentiality - assures that no one except
the sender and the receiver of the data can actually
understand the data.
c. The system had been tested prior to its
implementation and that the test results are
satisfactory. As a minimum standard, appropriate
systems testing and user acceptance testing should
have been conducted; and
d. A business continuity planning process and
manuals have been adopted which should include a
section on electronic banking channels and
systems.
PRE-SCREENING OF APPLICANTS
a. The BSP, thru the Technical Working Group on
Electronic Banking, shall pre-screen the overall
financial condition as well as the applicant-bank’s
compliance with BSP rules and regulations based
on the latest available Bank Performance Rating
(BPR) and Report of Examination (ROE) including
CAMELS Rating.
b. The Working Group shall ensure that the
applicant bank’s overall financial condition can
adequately support its electronic banking activities
and that it shall have complied with certain
comprehensive prudential requirements such as,
but not limited to, the following:
(b.1) Minimum capital requirement and net
worth to risk assets ratio;
(b.2) Satisfactory solvency, liquidity and
profitability positions;
(b.3) CAMELS composite rating of at least
3, (this number, however can be flexible depending
on other circumstances prevailing), and with at least
a moderate risk assessment system (RAS) based
on the latest regular examination.
(B.4) There are no uncorrected major
findings/exceptions noted in the latest BSP
examination.