MANILA — A memorandum of understanding (MOU) for the ratification of renminbi trading in the Philippines is set to be signed next week and similar pacts for trading other currency pairs are in the works, a ranking Bangko Sentral ng Pilipinas (BSP) official disclosed Friday.
This is part of the central bank’s program to deepen the foreign currency market in the country, BSP Deputy Governor Chuchi Fonacier said in a reply to a message from the Philippine News Agency (PNA).
“Underlying Continuity ++ objective of (BSP) Governor (Nestor A.) Espenilla (Jr.) is to deepen the FX (foreign currency) market for a more resilient domestic economy that can withstand external shocks,” Fonacier said.
She added that the MOU for renminbi trading, which will be signed by the central bank and several banks, provides for a fair, transparent and resilient renminbi market in the country, as usage of the Chinese currency increases.
Fonacier said she does not have the updated figure on the current volume of peso-renminbi transactions but stressed that “the BSP would like to highlight the governance framework for this trading market.”
She said the BSP would be the overseer of this currency trading market.
She also cited the need “for clearer accountability” since “this can have the benefits of establishing the trading market to support legitimate economic needs.”
“A similar approach may be undertaken for other currency pairs that the market may wish to establish (e.g. Japanese yen/Philippine peso),” she added.
The MOU that is scheduled to be inked on Oct. 30 will be signed by representatives of the BSP, the Bank of China Ltd. Manila and its partner banks — Asia United Bank (AUB), BDO Unibank (BDO), Bank of the Philippine Islands (BPI), China Banking Corp. (ChinaBank), East West Banking Corp. (EastWest Bank), Metropolitan Bank & Trust Company (Metrobank), Philippine Bank of Communications (PBCom), Philippine National Bank (PNB), Philippine Business Bank (PBB), Rizal Commercial Banking Corp. (RCBC), Sterling Bank of Asia, Security Bank Corp. (Security Bank), UnionBank of the Philippines (UnionBank), and Bank of Commerce.
Use of the Chinese currency in trading outside China began around 2005, initially through the capital markets. China also opened its domestic capital market and liberalized the interest rate mechanism to further widen the use of the renminbi. (Joann Villanueva/PNA)
