BSP wary of proposal to phase out large peso bills
The Bangko Sentral ng Pilipinas (BSP) appeared wary of proposals to withdraw large-denomination peso bills from circulation as a supposed deterrent to corruption, with Governor Eli Remolona Jr. warning that such a move could do more harm than good.
Speaking to reporters on Monday, Remolona said the idea, while still under discussion, risked burdening ordinary Filipinos who rely on cash transactions just to create “a small inconvenience” for corrupt contractors and public officials.
He pointed to similar debates abroad, including in the US, where proposals to phase out high-value banknotes to curb criminal activity—from money laundering to drug trafficking—failed to gain traction amid concerns about their impact on law-abiding cash users.
“It’s a tantalizing proposal, but it’s not so simple,” Remolona said. “To me, it’s like, you know the saying, you cut off your nose just to spite your face. You’re doing more damage than it’s beneficial.”
“But we’re still looking [into it]. We haven’t decided yet,” he added.
Cesar Purisima, who served as finance secretary during the administration of the late former President Benigno Aquino III, earlier suggested demonetizing P500 and P1,000 bills, arguing that smaller denominations would make it harder for corrupt officials to stash or move illicit cash.
Purisima said other countries have made similar moves before, though he acknowledged that limiting the highest denomination may bring short-term pain for small businesses and ordinary citizens. For that reason, he said this policy could be complemented with a six-month window for the public to exchange their P1,000 and P500 bills.
His suggestion followed explosive testimony in the Senate where two former engineers from the Department of Public Works and Highways claimed that roughly P1 billion in cash was once delivered to a lawmaker accused of graft.
The money, they said, was packed into more than 20 suitcases and ferried in six to seven vans to the penthouse of Ako Bicol Rep. Zaldy Co at a five-star hotel in Taguig City. Co, who has been linked to irregularities in flood control projects, has denied wrongdoing.
The former finance chief earlier called on policymakers to adopt tougher curbs on cash transactions. He warned that the country’s reliance on envelopes and bags of banknotes has made it easier for corruption to thrive.
The BSP later issued a new regulation limiting over-the-counter cash withdrawals to P500,000 a day, as part of efforts to reduce money laundering risks tied to large-value transactions.
At the same news conference yesterday, Remolona said the central bank was considering other measures to curb corruption linked to cash transactions, including steps to promote the use of traceable, non-cash channels such as checks and digital payments.
He added that the existing P500,000 cash withdrawal limit had been “very effective so far.”
“There are complaints, and we’re listening to those complaints,” he said. “But for now, I think it’s a good measure.”
