BSP further liberalizes forex policies

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Metro Manila (CNN Philippines, December 22) — The Bangko Sentral ng Pilipinas (BSP) on Friday issued new policies to streamline and ease foreign exchange transactions in the Philippines in a bid to support the country's economic activities.

The BSP in a press release said it has lifted a prior rule that required purely private sector loans -- or loans without any exposure of any public sector entity -- to gain approval from the central bank first.

Unlike previous policies that required private companies to gain BSP approval before acquiring foreign loans, such transactions now only need to be registered with the BSP.

The BSP also decreased requirements for the registration and purchase of foreign exchange. They will now accept more forms of documents, including scanned "Application to Purchase FX" forms.

The central bank has also opened a temporary six-month window for the registration of purely private sector loans that were obtained without BSP approval prior to the new policy. This will be based on guidelines set by the BSP.

"The BSP registration of these accounts will qualify the outstanding balances of the obligations to be paid on scheduled due dates using FX (foreign exchange) resources of the banking system," it said.

Prior to this reform, loans could only be settled either with foreign exchange by the borrower, or sourced outside the banking system.

The BSP said the six-month window is so it can widen its record on the country's external obligations to enhance policy review and formulation.

These reforms will take effect starting January 15, 2018.

BSP Governor Nestor Espenilla Jr. said the move is in line with the central bank's goal to ease the use of foreign exchange in the banking system for "legitimate needs." He added, it comes as the central bank notes the "continuing volatility" of external financial markets.

This is the 11th wave in a series of liberalized foreign exchange policies made by the BSP since 2007.

CNN Philippines' Claire Jiao and Amanda Lingao contributed to this story.