THE听PHILIPPINE听central bank听on Friday said听it听would expand the coverage of entities allowed to engage in foreign currency deposit units (FCDU) to include Islamic and digital banks.听
The central bank would also streamline licensing rules on expanded听FCDUs听as part of changes to FCDU rules that听seek to听help banks manage risks,听Bangko听Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno told an online news briefing.听
The Monetary Board approved the changes under the second phase of the Foreign Currency Deposit Unit (FDCU) regulations.听
鈥淭he amendments aim to promote effective risk management in banks by recalibrating the requirements for FCDU transactions in line with the current business norms and risk management practices,鈥澨齢e said.听
鈥淢oreover, the stringent conditions on lending to regular banking unit by听expanded FCDUs听will be amended to provide banks with the opportunity to perform efficient and flexible liquidity and cash management practices on their FX funds,鈥澨齢e said.听
The BSP plans to issue a circular on the new foreign currency deposit rules.听
The Monetary Board in May last year approved the first phase of reforms听for听the foreign currency deposit system.听
The circular aimed to ease the asset cover standards of banks to improve flexibility in managing foreign currency deposit exposure. This allowed a two-week compliance period to bring听the听coverage back to 100%.听
The two-week compliance period allows for more flexibility to manage foreign currency exposure as banks are required to听keep听100% asset cover at all times on expanded听FCDUs.听鈥斕Jenina听P.听Iba帽ez听
