Press Release
November 25, 2007

REDUCTION OF REMITTANCE COSTS IS THE BEST PROTECTION
FOR OFWS - ANGARA

Protecting the interest of hardworking Filipinos, Senator Edgardo J. Angara today called for the immediate passage of the new Central Bank charter to strengthen its regulatory and supervisory powers over banks and other financial institutions.

"If we allow Bangko Sentral to provide policy directions in areas of money, banking and credit, transparent mechanisms - especially for money remittances from our OFWs - can be established. In effect, these mechanisms would largely prevent an unfavorable impact on peso," said Senator Angara, who chairs the Senate Committee on Banks and Financial Institutions.

In a joint report of the United Nations' International Fund for Agricultural Development (IFAD) and the Inter-American Development Bank (IDB), the Philippines ranked as the fourth-biggest collector of money transferred by overseas workers after receiving $14.65 billion last year

In an Asian Development Bank study, however, there are about 424, 812 remitters who coursed through informal systems and padala practices amounting to $1.5 billion per year.

"OFWs still prefer to send remittances through informal channels rather than through commercial banks believing that these unregulated money transfer agencies offer the best rates and will provide lower remittance costs," he added.

With the goal of strengthening the Banko Sentral ng Pilipinas (BSP) by enforcing international best practices in banking supervision and better regulate the local financial sector, Senator Angara has filed a bill seeking to amend its charter.

Under the bill, the BSP will be given the authority to request date not only from government entities but also from any person. It can evaluate and determine the financial condition, not only of the parent institution under its supervision but also of its subsidiaries and affiliates.

BSP shall also have the authority to approve transfers or acquisitions of shares in a supervised institution where such transfer or acquisition or series of transfers or acquisitions should be sufficient to elect at least one seat in the board or would effect a change in the majority ownership or control of the voting stock of the institution.

In addition, the Monetary Board shall have the authority to direct existing stockholders to infuse additional capital or in case of their inability or refusal, to direct them to accept new investors or merge or consolidate with a qualified financial institution.

The bill also seeks to prescribe additional and transparent grounds for bank closure announcement of unilateral closure, suspension of payment of deposit substitutes, or inability to pay liabilities as they become due to enable Philippine Deposit Insurance Corporation (PDIC) to recover their payments of insured deposits.

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