The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, approved in a meeting recently a proposal to allow thrift banks authorized to operate foreign currency deposit units to invest in long-term readily marketable foreign currency denominated debt instruments.

In a statement released to the media, the BSP said that under existing regulations, universal and commercial banks with expanded FCDU license are allowed to invest in foreign currency denominated debt instruments, regardless of maturity and marketability. On the other hand, thrift banks with FCDU license are only allowed to invest in foreign currency denominated debt instruments that are of short-term maturity and readily marketable.

The BSP decided to allow thrift banks to also invest in long-term debt instruments but only for as long as these instruments are readily marketable, the press release added. For the revised rules, BSP decided to adopt International Accounting Standard 39.

This accounting standard defines readily marketable instruments as instruments that are quoted in an active market and the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency.

The expansion of activities of thrift banks with FCDU license aims to providing them with greater flexibility in their investment and liquidity strategies, the BSP press released added.

The BSP policy is also in response to the thrift banking sector's manifestation of confidence in the economy, which has been experiencing unprecedented high levels of foreign currency remittance from Overseas Filipino Workers.

With the new policy, thrift banks can now use long-dated marketable instruments as investment outlet that will allow them to offer more attractive yields to depositors, majority of whom are OFW remittance beneficiaries, the press release said.*

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