January 23, 2017
SEN. CHIZ ESCUDERO Sponsorship Speech
Mr. President, Honorable Colleagues of this august Chamber:
As Chairperson of the Committee on Banks, Financial Institutions and Currencies, I rise to sponsor Committee Report No. 26, which recommends the approval of Senate Bill No. 1297 entitled, "An Act Amending Republic Act Number 7653, otherwise known as "The New Central Bank Act", and for other Purposes" which is a bill prepared by the Committee in substitution of Senate Bill Nos. 16, 859, 1027 and 1148 authored by Sens. Drilon, Recto, Ejercito and this representation.
Public hearings and Technical Working Group meetings were also held on 5 September 2016, 13 September 2016 and 11 October 2016.
Background: Republic Act No. 7653 created the Bangko Sentral ng Pilipinas (BSP) pursuant to the directive in the 1987 Constitution mandating the establishment of an independent central monetary authority. The BSP replaced the old Central Bank of the Philippines, which had been established by Republic Act No. 265 in 1948. Twenty years after, the economic milieu in the Philippines has changed, globalization has increased the integration of financial markets, and the scope of operations of financial institutions has evolved. Undoubtedly, there is a need to respond to contemporary challenges by amending R.A. No. 7653 in order that the BSP shall remain effective in its conduct of monetary policy and supervision of entities within the financial system.
Salient Features: The bill proposes to strengthen the tools which the BSP exercises in performing its mandates, supplement the mechanism in protecting savings of depositors and in ensuring the smooth flow of transactions in the financial system, as well as to enhance the corporate viability of the BSP. The salient features of the bill are as follows:
1. Strengthening BSP's Monetary Stability function
a) Restoration of authority to obtain data for purposes of statistical and policy development, as well as ascertaining compliance with laws and banking regulations, and authority to issue negotiable certificates of indebtedness even during normal times, both of which were powers granted to the old Central Bank of the Philippines; and
b) Removal of thresholds in the growth of monetary aggregates, credit and prices as guiding principles in monetary administration, in view of current international trends in monetary policy frameworks adopting inflation targeting.
2. Strengthening BSP's Financial Stability function
a) Formal statutory recognition of the BSP's mandate of promoting and maintaining financial stability in close coordination with other relevant agencies, as well as grant of statutory oversight of payment and settlement systems. Central Banks in Asia typically have a financial stability mandate. - China, Malaysia, Singapore.
3. Enhancing BSP's Prudential Supervision Function
a) Enhancement of BSP's supervisory authority by:
i) expanding the entities it supervises to include other categories of financial institutions;
ii) granting authority to impose sanctions on transfers and acquisitions of substantial shares of banks and quasi-banks without BSP approval;
iii) allowing full flexibility to conduct risk-based supervision of financial institutions;
iv) strengthening of administrative and criminal sanctions to include, among other things, forfeiture of profits from unauthorized financial transactions; and
v) improving resolution mechanisms to deal with problematic financial institutions; and
b) Legal protection for BSP officials and staff when performing official duties similar to that provided to officers and employees of the Philippine Deposit Insurance Corporation (PDIC) under the latter's charter (Republic Act No. 9576 as amended by Republic Act No. 10846).
4. Strengthening BSP's Corporate and Financial Viability
a) Additional BSP capitalization of P150 billion, payable immediately upon effectivity of the Act
b) Grant of flexibility to establish adequate loss allowances and create reserve buffers against future risks and contingencies, and restoration of tax exemption, similar to other central banks in the world;
c) Enhancement to credit operations by granting exemption from court processes relating to collateral obtained from banks, similar to that enjoyed by Land Bank of the Philippines (LBP), and the authority to deputize the BSP legal staff in extrajudicial foreclosure of mortgaged properties in the same manner that the legal staff of LBP and Development Bank of the Philippines (DBP) may so be deputized under their respective charters.
Among the Other Features of the Bill are as follows:
These amendments will empower the BSP to effectively respond to challenges and innovations of a globalized economy and, more significantly, to better perform its constitutional mandates. Indeed, an empowered BSP is indispensable in ensuring a competitive, robust and inclusive economy attractive to investments and business that generate employment and promote inclusive growth, and a financial system that will support a higher quality of life for Filipinos.
Mr. President, I earnestly insist that this Chamber act expediently on Committee Report No. 26 / Senate Bill No. 1297 entitled, "An Act Amending Republic Act Number 7653, otherwise known as "The New Central Bank Act", and for other Purposes".
Thank you, Mr. President.
Wednesday, April 26
Tuesday, April 25