In line with the provisions of Republic Act (RA) No. 11127 or the National Payment Systems Act (NPSA), the Monetary Board approved on 25 June 2020 the Payment System Oversight Framework (PSOF) which sets out the regulatory approach of the Bangko Sentral ng Pilipinas (BSP) to overseeing payment systems in the country.
Under the framework, the BSP shall pursue cooperative oversight with other concerned regulators for activities and interlinkages between payment systems and other financial market infrastructures. The BSP shall also designate payment systems which are systemically and prominently important. Payment systems which pose or have the potential to pose systemic risk that could threaten the stability of the national payment system (NPS) are considered systemically important. The prominently important ones are those which pose no systemic implication but may have major economic impact or could undermine the confidence of the public in the NPS or in the circulation of money in general.
When a payment system has been designated, the participants1 in that system are subject to closer oversight activities. In the event that the operator of a designated payment system fails to satisfy regulatory expectations, resulting in a threat to the safety, efficiency, and reliability of the system, the PSOF provides for the appointment by the BSP of a manager for the designated payment system.
The newly approved policy further provides that the BSP is authorized to accredit or revoke the accreditation of a Payment System Management Body (PSMB). Following this provision, the Monetary Board has also approved the accreditation of the Philippine Payments Management, Inc. (PPMI) as a PSMB. This accreditation deepens the foundation of the self-regulatory function of the PPMI over its members.
With the adoption of the PSOF, the BSP continues to promote a safe and efficient national payment system, which is crucial to the smooth functioning of financial markets and the stability of monetary and financial systems.
1 The NPSA defined participants of a payment system as the operator, issuer, service provider, or any person involved in the payment system other than the end-user.
Source: Bangko Sentral ng Pilipinas (BSP)