PDS, Bank of China setting up renminbi transfer service
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MANILA - The Philippine Dealing System Group (PDS) and Bank of China are putting up infrastructure for renminbi transfer service in the Philippines.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said PDS and Bank of China launched the Domestic Renminbi Transfer Service, which would integrate with the renminbi global payment system.
“We expect this to provide bank members and their clients the facility to execute real-time payments in and transfers of, renminbi to domestic and international counterparties,” Guinigundo said.
Guinigundo said the facility would encourage more transactions in renminbi, a currency that is gaining significance and generating interest in the global market given China's role as the world's second biggest -- and fastest-growing -- economy.
In 2006, the Monetary Board included the renminbi in the list of convertible currencies, encouraging banks to exchange clients' holdings of the Chinese currency directly to Philippine pesos and consequently facilitate financial transactions of Chinese businessmen and tourists.
In 2008, the Board allowed direct conversion of the renminbi in recognition of the currency’s increasing role in trade transactions within the region.
China is the Philippines' third largest foreign trading partner, accounting for about 14 percent of total trade as of July this year.
China was also the Philippines’ biggest source of imports at end-July this year, with a 13 percent share or $4.6 billion of the total import bill. This is 23.5 percent higher than the $3.7 billion recorded in the same period in 2012.
Exports to China comprised about 10.5 percent of Philippine goods shipments, rising 26 percent from $381 million in August last year to $480 million this year.
Foreign direct investments (FDI) from China have also been rising in the last few years amounting to $2 million in the first seven months of this year, a reversal of the net outflow of $0.08 million recorded last year.
“Considering the magnitude and importance of the country’s transactions with China, it is only appropriate that we have a safe and efficient payment and transfer service for renminbi,” Guinigundo said.
There are 11 banks offering renminbi-denominated products and services such as deposits, remittances, and trade settlement.
Renminbi-denominated deposit liabilities stood at P3.9 billion or RMB589 million as of December 2012.
From 2009 to 2012, renminbi deposits rose from 0.05 percent to 0.22 percent of the Philippine banking industry's deposit liabilities, and comprised around 0.22 percent to 1.04 percent of the total foreign exchange deposit liabilities, respectively.
The ability of renminbi account holders to denominate, settle and clear transaction with parties conducting businesses in renminbi minimizes exposure to exchange rate fluctuations of a third currency.
Since the service will use an electronic real-time payment system, this will also be cost efficient since it will reduce the friction cost for renminbi trade payments to/from clients who settle them in US dollars; and transfer charges of transactions that also pass through more intermediaries and manual processes.