Speaker Feliciano Belmonte Jr. has welcomed the House of Representatives’ approval on third and final reading of House Bill 5875, which he principally authored, seeking to amend Republic Act 7653, also known as “The New Central Bank Act.”
Belmonte said that 23 years since “The New Central Bank Act” was enacted, the economic milieu in the country has changed, globalization has increased the integration of financial markets, and the scope of operations of financial institutions has evolved.
“In light of this realities and developments, there is undoubtedly a need to respond to contemporary challenges by amending RA 7653 so the Bangko Sentral ng Pilipinas remains effective in its conduct of monetary policy and supervision of entities within the financial system,” Belmonte said.
He said the House approval of HB 5875 last Oct. 7 was a big step toward fulfilling the desired amendments to RA 7653 in order to strengthen the BSP’s Monetary Stability Fund, Financial Stability Function, and Corporate and Financial Viability.
“Once these amendments are enacted into law, they will empower the BSP to effectively respond to challenges and innovations of a globalized economy, and more significantly, in performing its constitutional mandates. Indeed an empowered BSP is indispensable in ensuring a competitive, robust and inclusive economy, and a financial system that delivers a high quality of life for Filipinos,” said Belmonte.
Belmonte said the bill seeks to: strengthen the tools which the BSP uses in performing its mandates; supplement the mechanisms in protecting savings of depositors and in ensuring the smooth flow of transactions in the financial system; and enhance the corporate viability of the BSP.
The approved HB 5875 provides the capital of the BSP shall be P200 billion, to be fully subscribed by the government. The unpaid subscription shall be fully paid for the government in cash and/or government securities upon effectivity of the Act.
The capitalization shall be subject to review every five years upon joint recommendation by the secretary of Finance, secretary of Budget and Management and the Monetary Board. The payment of any unpaid subscription and/or increase in capitalization shall be appropriated in the General Appropriations Act.
It also says the BSP shall provide policy directions in the areas of money, banking and credit. It shall have supervision over the operations of banks and exercise such as regulatory powers and other pertinent laws over the operations of finance companies and non-bank financial institutions performing quasi-banking functions, credit card companies, money changing businesses, pawnshops, e-money issuers, money forwarding businesses, payment and settlement system operators and other institutions performing similar functions, as may be determined by the Monetary Board, consistent with the mandate of the BSP, to provide policy direction in the areas of money banking and credit.
In terms of responsibility, the bill provides the general rule and the exception there from on the liability of public officers as provided in Sections 38 and 39 of Chapter 9 Book 1 of the Revised Administrative Code of 1987 shall apply to members of the Monetary Board and other personnel of the BSP.
Moreover, the BSP, its officials and employees, shall be indemnified for any and all liabilities, losses, claims, demands, damages, deficiencies, costs and expenses of whatsoever kind and nature that may arise in connection with the performance of their duties done in good faith and consistent with the powers and functions authorized.
Another salient amendment is that consistent with the prevailing practice in the Philippine Statistical System, those who refuse to supply the BSP with the required data or information shall be subject to a penalty of one year imprisonment and a fine of P100,000. In cases where the violation is done by a corporation, the above penalty shall be imposed against the responsible officer, director, manager and/or agent of said corporation. The erring company or juridical entity shall be fined P100,000 to P500,000.
The bill also allows the BSP to establish a reserve fund to mitigate future risks and contingencies inherent in carrying out the BSP-mandated functions as central monetary authority. The reserve fund shall consist of fluctuation reserve, contingency reserve and such other reserves as the Monetary Board deems prudent or necessary.
The fluctuation reserve shall cover losses from exchange rate and price volatility and shall be derived from the net profits before distribution, as provided under Section 44 of the Act. All other reserve funds shall be sourced from surplus.
The bill also allows the BSP to acquire shares of any kind or accept them as collateral, and shall not participate in the ownership or management of any enterprise either directly or indirectly. This prohibition shall not apply whenever the Monetary Board by a vote of at least five of its members, deems an acquisition or investment to be necessary to qualify or as required for membership in international and regional organizations.
