MANILA -- The Bangko Sentral ng Pilipinas (BSP) is studying a formal governance framework that will provide stakeholders with a level playing field and ensure transparency in the foreign exchange market as well.
BSP Deputy Governor Chuchi Fonacier said monetary authorities continue to liberalize the foreign exchange market to ensure that policies are attuned with the current situation.
She said that the central bank “is keen on developing a more organized FX (foreign exchange) trading market that supports a flexible and market-determined exchange rate.”
“In this regard, we intend to set up a formal governance framework to clearly establish BSP’s direct supervision over the FX market pursuant to our Charter,” she said in a speech delivered during the annual joint general membership meeting of financial market institutions Thursday night.
The BSP has a market-determined exchange rate policy although the central bank joins in the market to address excessive volatility.
Fonacier said the framework they are currently working on will tackle the central bank’s roles and responsibilities as the ultimate overseer of the foreign exchange market, the role and responsibilities of the industry’s governing body and market participants, the provisions on adherence to international standards and best practices, and control mechanisms or arrangements to mitigate potential conflicts of interests.
She said that the regulator “believes that non-discriminatory participation in and efficient governance structure of the FX market is essential.”
“To level the playing field, the BSP espouses a multilateral arrangement approach so that each FX market participant will commit to bind themselves to mutually agreed rules governing the market operation,” she said.
The central bank official said this move is seen to effectively make all participants participate in the rule-making process.
“Changes in FX market rules and conventions, as well as infrastructure, must also be made in order to comply with international standards and to encourage wider participation of market players,” she added. (PNA)
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