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BSP encourages public to open formal savings accounts

The Bangko Sentral ng Pilipinas (BSP) on Wednesday, June 15, issued a reminder to the public to deposit their hard-earned money in formal accounts rather than keep their savings or cash at home.

“The unnecessary accumulation of banknotes and coins prevents Philippine currency from being recirculated and used as payment instrument,” said outgoing BSP Governor Benjamin E. Diokno. He will leave BSP on June 30 to serve as finance chief under the new Marcos government.

BSP Governor Benjamin E. Diokno

By circulating cash, Diokno said the BSP will mint fewer coins for example, if these are “efficiently circulating.”

“The reduced production costs would allow the central bank to remit more dividends to the national government, which would help fund pandemic-response measures and social services,” he added.

The BSP in a statement said storing banknotes and coins cause artificial shortage. When kept at homes, money are stored in jars, barrels, plastic bottles, and cabinets.

Such actions “hampers the efficient circulation of currency, causing an artificial shortage (and) this would then require the BSP to increase the amount of banknotes and coins in circulation, resulting in additional production costs,” said the central bank.

The BSP again is urging the public to deposit their savings in formal accounts with regulated institutions such as banks, e-money issuers, microfinance institutions, cooperatives, and non-stock savings and loan associations.

“Hard-earned savings placed in these formal accounts are safeguarded through regulations imposed by the BSP and other relevant agencies. In the case of bank deposits, these are insured by the Philippine Deposit Insurance Corporation and would earn interest over time,” said the BSP.

Diokno said account ownership also serves as a gateway to financial inclusion. “It enables people to participate in the benefits and opportunities of the formal financial system, empowering them to build a better financial future,” he said.

The BSP has been analyzing and reviewing the currency denominational structure as the country transitions into a cash-lite and non-coin society.

The BSP’s Payments and Currency Development Sub-sector is in charge of the currency denomination structure review which would likely include banknotes and coin denomination – from the lowest of coins to the highest of banknotes value – that are projected to have enough demand to keep on as the BSP shifts to more e-payments system.

The BSP has studied other economies in how they transformed into not just a cash-lite but coinless society.

Research findings showed that shifting towards a cash-lite system benefited business and economic activities.

At the moment, the BSP prints five banknotes denominations and seven coin denominations. There used to be six banknotes and six coins plus the 10-sentimo, but when Diokno became BSP’s fifth governor, he pursued the gradual phase out of the P20 bill to a P20 coin which the central bank circulated in 2019.

The seven coins produced by the BSP are the 1-sentimo, 5-sentimo, 25-sentimo, 1-piso, 5-piso, 10-piso and 20-piso. The 10-sentimo has been removed when the New Generation Currency coins were re-launched in 2018, but it was not demonetized.

Both the banknote and coin version of the P20 will continue to co-exist until the BSP rans out of materials for the P20 banknote, but to date, the BSP has not called for its demonetization yet. The five banknotes remain as the 50-piso, 100-piso, 200-piso, 500-piso and 1,000-piso.

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