BSP eyes tighter liquidity, recovery rules for e-money issuers
The Bangko Sentral ng Pilipinas (BSP) is proposing tighter rules on electronic money (e-money) issuance to strengthen consumer protection, requiring nonbank companies like e-wallets to keep enough funds on hand to cover customer balances and have plans ready in case they run into financial trouble.
The central bank is seeking input from industry stakeholders on a draft circular that would extend liquidity requirements to nonbank e-money issuers.
Currently, these rules apply only to banks, which must hold at least 50 percent of outstanding e-money balances in trust.
The remainder must be kept in liquid assets, including bank deposits, government securities or settlement accounts with the BSP.
“The proposed policy amendments aim to strengthen the protection of e‑money holders and promote financial stability by establishing uniform liquidity requirements across issuers, clarifying regulatory expectations on trust arrangements and introducing proportionate recovery planning for nonbank issuers,” the BSP said.
The proposed rules would impose tighter controls across the board.
E-money issuers—both banks and nonbanks—would be prohibited from using protected funds without BSP approval if they fail to recover from financial stress.
At the same time, all liquid assets would need to be “unencumbered,” meaning free from any other financial obligations.
The draft circular would also require nonbank issuers to develop and maintain formal recovery plans to navigate periods of financial stress. These plans must identify critical services, set early warning indicators for capital and liquidity issues and establish restoration targets and timelines.
They must also include a menu of feasible recovery options—such as additional funding or temporary reduction of noncritical services—as well as stress testing, annual plan testing and for foreign-linked issuers, alignment with the parent company’s recovery strategy.
Intervention powers
The BSP is also seeking to enhance its crisis intervention powers for nonbank e-money issuers in financial trouble.
Under the draft circular, the central bank may declare when a company can no longer continue operations without external support and has no reasonable prospect of recovery within a practicable period.
Once the BSP determines that an issuer has reached the point of nonviability, all liquid assets earmarked for e-money redemptions would remain restricted until explicitly authorized for release.
The central bank—or its designated manager or receiver—would immediately assume full control over these assets, managing, transferring, disposing of, or releasing them as necessary to protect consumers.
Lastly, the proposal aims to enhance consumer protection by requiring e-money issuers to notify their users and partner stores at least 60 calendar days before implementing changes to the terms and conditions of their financial products and services.
