The Pillars of the Bangko Sentral ng Pilipinas
a) Impact Assessment – involves evaluating
Price Stability
- a condition of low and stable
inflation
- helps ensure strong and
sustainable economic growth
and better living standards
- implemented through the
various monetary policy tools
2) Financial Stability
- covers systemic risk management and financial
supervision
- responsibility of the Office of Systemic Risk
Management which is under the direct
supervision of the BSP Governor
- implemented through the Macroprudential
Policy Strategy Framework and Supervisory
Assessment Framework (SAFr)
SYSTEMIC RISK – disruption to any part of the
financial system that specifically have the ability to
adversely affect the rest of the economy
Financial Stability
- the state when prospective systemic risks are
mitigated so as to allow individual and corporate
entity financial consumers to pursue viable economic
goals while avoiding disruptions to the smooth
functioning of the financial system that
can negatively affect the rest of the
economy.
SCHINASI’S FIVE PRINCIPLES OF FINANCIAL STABILITY
Schinasi suggested that any definition of financial
stability must consider:
1) covering infrastructure, institutions and
markets;
2) payment systems throughout the economy;
3) ability to limit, contain, and deal with the
emergence of
imbalances;
4) potential consequences on the real
economy; and
5) financial stability as occurring along a
continuum
Financial Supervision
- makes use of the Supervisory Assessment
Framework to facilitate robust, dynamic and forward
looking risk evaluation of BSP supervised financial
institutions
ELEMENTS OF THE SAFr:
the potential impact of the
BSFI in the event of distress
b) Risk Assessment – renders judgment on
the resilience of the BSFI to
adverse business and economic
conditions
c) Supervisory Intensity – depth of
supervisory attention required
for and applied to the BSFI
3) Payments and Settlements
- essential to the effective
functioning of financial systems
- provide channels for the transfer of
funds among individual, banks and
other institutions
- includes Peso RTGS payment system
and the National Retail payment
system
- must be safe, efficient and reliable
ROLE OF BSP IN THE PAYMENTS AND SETTLEMENTS
SYSTEM
a) Operator of the real time gross settlement
system known as PhilPaSS
b) Provider of credit facilities to banks as a
lender of last resort
c) Overseer of the payments and settlements
system
d) User of its own RTGS system
e) Initiate changes/reforms for the payments
system
What is PhilPaSS?
a) - stands for Philippine Payment and Settlement
System
b) - it is a real-time gross settlement (RTGS) system
owned and operated by the Bangko Sentral ng
Pilipinas in accordance with its authority under
the National Payment Systems Act
c) - provides instant settlement of payments,
transfer instructions, or other obligations
individually on a transaction-by-transaction basis
d) - operates daily from 9:00AM to 5:45PM,
Mondays through Fridays
b) Provider of credit facilities
- BSP provides the following liquidity tools to PhilPaSS
participants:
i) Intraday Liquidity Facility (ILF) – a fully collateralized facility CORE PRINCIPLES OF NRPS:
established to maintain the smooth and efficient operation of
i) INTEROPERABILITY – a state in which customers can
the payments system in order to avoid interbank payments
transfer funds from their own account to any BSP-
gridlock in the settlement process within PhilPaSS business
regulated transaction account using any device
hours
ii) INCLUSIVITY – all qualified financial service providers
ii) Overdraft Credit Line (OCL) – another collateralized facility
must be able to effectively participate in the system –
which aims to assist bank experiencing unexpected or higher
regardless of their size and type of transaction
than usual volume of inward check transactions. This provides
accounts offered
additional liquidity for banks encountering liquidity problems
due to check clearing losses as well as protect the BSP against iii) COOPETITION - coined from the words “cooperation”
settlement exposures. and “competition,” because NRPS promotes both
cooperation and competition in the industry.
c) Overseer of the payments and settlements system
Cooperation in terms of abiding with clearing and
- The BSP, through the Payments Supervision and Licensing settlement rules and standards, industry governance
Department of the Payments and Currency Management and risk management while competition is through
Sector, oversees the payment systems in the country to ensure product features such as end-user fees, delivery
safeguards are in place to mitigate systemic risks arising from channels and customer service
settlement, credit and liquidity risks of payments and
settlement systems participants

d) User of its own RTGS system

The BSP also make use of the payments and settlements

system for the settlement of its own transactions with its
stakeholders, such as:

i. The automated collection and settlement of Financial

Supervision Sector annual supervisory fees;
ii. Online processing of eRediscounting loan proceeds
and collection of banks’ maturing loans with
Department of Loans and Credit;
iii. Processing/posting of banks’ cash deposit and
withdrawal transactions with BSP Greater Manila
Regional Office;
iv. Investment/maturities of funds placed by the
Provident Fund Office; and
v. Trading transactions as well as payments of maturing
RRP/SDA placements with Financial Markets

e) Initiates changes or reforms in the payment system

The BSP initiates the conduct of studies/research relating to

payments system to ensure that it grows and matures in
accordance with the global standards. Among the studies
conducted which initiated reform to the retail payment
systems in the country is the

National Retail Payment System.

National Retail Payment System (NRPS)

- provides the framework to secure promised gains of

modernizing retail payments for the benefit of the consumers,
the industry and the economy as a whole