BSP acts to help ease pressure on peso

By Doris DumlaoPhilippine Daily InquirerFirst Posted 03:30:00 11/01/2008
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Bracing for an escalating global financial turbulence, the central bank, Bangko Sentral ng Pilipinas (BSP), announced new measures to ease pressure on the sharply weakening peso as well as to help temper banks’ losses from depressed asset values.
BSP Governor Amando Tetangco Jr. said the central bank had granted a temporary relief on the booking of losses arising from banks’ foreign currency deposit units (FCDU) assets to stop banks from scrambling for US dollars at the foreign exchange market to meet asset cover requirements.
“This is another measure taken by the Monetary Board [the policymaking body of the BSP] in recognition of the extraordinary circumstances in the global financial market that has created unprecedented market volatility,” Tetangco said.
An FCDU is a unit of a local bank or of a local branch of a foreign bank authorized by the BSP to engage in foreign exchange denominated transactions, such as accepting foreign currency deposits and granting of foreign currency loans.
The FCDU system’s deposits— such as those placed by overseas Filipinos and their families, exporters or multinational corporations—are considered the country’s second layer of foreign reserves.
As an additional one-time regulatory relief, Tetangco said the BSP was giving banks with exposure to structured products a more flexible way of booking market losses from these instruments.

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