BSP Cautious on Proposal to Demonetise High Value Banknotes
While describing the idea as “tantalising,” BSP Governor Eli Remolona warned that such a move could do more damage than benefits for the general public who rely on these notes for legitimate transactions.
Former Finance Secretary Cesar Purisima made the suggestion following recent allegations of corruption involving large cash transactions.
BSP Governor Eli Remolona described the demonetisation idea as a “tantalising proposal” but expressed caution. Citing his experience at the New York Federal Reserve with a similar dilemma over the US$100 note, he warned of the negative consequences for the public.
Remolona cautioned that such a move could be more damaging than beneficial, explaining that many ordinary people use high-value notes for their legitimate, everyday transactions.
The BSP is currently working to strengthen its anti-money laundering framework. As part of this, the central bank recently issued Circular No. 1218, mandating that financial institutions ensure customers conduct transactions of PHP 500,000 or more through traceable options like cheques or online fund transfers.
According to Remolona, the new policy makes life easier for banks because they can now cite a specific BSP rule when refusing suspicious large cash transactions.
The BSP is also looking to improve its use of suspicious transaction reports (STRs).
Eli M. Remolona, Jr
“We’re looking at that, trying to enhance it so that it’s easier for us to connect the dots,” Remolona stated.
He added that the central bank is searching for a digital solution to help better analyse the large volume of reports it receives.
