The Monetary Board (MB) has approved the designation of the Philippine Domestic Dollar Transfer System (PDDTS) and the Philippine Peso (PHP)-US Dollar (USD) Payment versus Payment System (PvP) as Systemically Important Payment Systems (SIPS), pursuant to the National Payment Systems Act (NPSA).
The PDDTS is the only payment system in the country that enables the transfer of USD funds from one bank to another without going through correspondent banks in the United States.
Similarly, the PvP is the only exchange-of-value settlement system for the PhP and USD. The exchange is carried out by linking two payment systems, namely the PDDTS and the Peso Real-time Gross Settlement System (Peso RTGS), for the settlement of the USD and PhP payments, respectively.
Operated by the BSP, the MB designated the Peso RTGS as the country’s first SIPS in July 2021. SIPS are subject to closer BSP supervision and monitoring.
The public is expected to benefit from the enhanced safety, reliability and efficiency requirements for the PDDTS and PvP as these promote financial stability and foster economic development.
The designation of payment systems is a salient feature of the risk-based approach under the Payment System Oversight Framework or BSP Circular 1089 series of 2020.
Under the framework, a payment system is designated as SIPS if it poses potential systemic risk that could threaten the stability of the national payment system.
As designated payment systems, the PDDTS and PvP shall likewise observe the Principles for Financial Market Infrastructures pursuant to Circular 1126 series of 2021.
Adoption of the said internationally accepted standard will support the BSP’s goal to digitalize half of retail payments by 2023. (BSP)