New central bank sector to support efforts toward cash-lite economy

THE BANGKO SENTRAL ng Pilipinas (BSP) has set up a Payments and Currency Management Sector (PCMS) headed by financial inclusion expert Mamerto E. Tangonan as deputy governor as it aims to make the country a cash-lite society by 2023.

“We established the PCMS to further bolster BSP’s capabilities in managing the interplay between digital money and physical currency,” BSP Governor Benjamin E. Diokno said in a briefing on Thursday.

The PCMS will oversee three functional units: the Currency and Securities Production unit under Managing Director Mary Anne P. Lim, the Payments and Currency Development unit headed by Assistant Governor Edna C. Villa, and the Payments and Currency Management Operations unit led by Managing Director Elvira D. Lorico.

Mr. Tangonan will also oversee the operations of the central bank’s Security Plant Complex which is in charge of printing money.

“While cash payments will remain, digital payments are expected to increase as consumers become more familiar with its uses and as more segments of the economy take it up as part of their business model,” Mr. Tangonan said.

Mr. Tangonan previously headed the six-year E-PESO project funded by the United States Agency for International Development which worked towards accelerating the country’s shift to digital payments from cash.

He also spearheaded a team that provided technical assistance to the BSP in the policy formulation and implementation of the National Retail Payments System (NRPS).

The new deputy governor received his bachelor’s degree in civil engineering from the University of the Philippines and took an executive Masters in Business Administration at the Asian Institute of Management.

Mr. Diokno said fostering an environment for digital payments will have benefits in terms of financial inclusion and ease of doing business, which could support economic growth.

“One empirical study revealed that moving to a cashless model will have an impact of one percentage point to annual GDP (gross domestic product) among mature economies and more than three percentage points for those of emerging economies,” Mr. Diokno said.

The central bank wants 50% of all payments in volume and value done digitally by 2023.

E-payments made up 10% of the total volume in 2018 from just 1% in 2013, based on a study by Better than Cash Alliance. Meanwhile, it comprised about 20% of the total transactions in terms of volume from a mere 8% in 2013.

Mr. Diokno said the core duties of the PCMS will be anchored on the mandates of the National Payments System Act or the Republic Act No. 11127, which aims to promote safe, efficient, and reliable payment systems.

He said the PCMS will have a different role from the Financial Supervision Sector (FSS) led by BSP Deputy Governor Chuchi G. Fonacier, which is mainly in charge of promoting safety and soundness in the financial system through overseeing banks and quasi-lenders.

“It (FSS) will continue with its mandate to supervise banks and other nonbank institutions while the PCMS will oversee payment systems including non-banks that operate and provide payment services,” Mr. Diokno said.

Mr. Tangonan said he looks forward to helping improve the country’s QR scheme, bills payment and to allow regularly occurring payments such as rent and installments through online transactions. — Luz Wendy T. Noble

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