Project Owner: Bangko Sentral ng Pilipinas
Cash Service Alliance – Promoting Collaborative Partnerships for Undisrupted and Efficient Currency Supply and Distribution
Due to the COVID pandemic, the Philippine Government imposed lockdowns characterized by stringent health and safety restrictions, suspension of public transport, and closure of non-essential businesses. The Bangko Sentral ng Pilipinas (BSP) remained at the forefront of providing adequate banknotes and coins to support critical economic transactions.
The Cash Service Alliance (CSA) was launched, in partnership with the Bankers Association of the Philippines, as a cash circulation mechanism that enables banks to enter into a mutually beneficial agreement to service requirements for fit Philippine currency of other banks from their available cash holdings. In October 2020, the BSP issued Circular No. 1099 and provided an online system to facilitate the direct exchange of fit currency among banks.
From 26 October 2020 to 25 May 2021, 147 MILLION pieces of fit banknotes amounting to PHP116 BILLION were sourced from the CSA. These represent 72 percent in value and 55 percent in volume of fit currency requirements of banks. 90 percent of the client-banks of BSP already participated in the CSA.
Further, during the recent imposition of stricter lockdown from 29 March 2021 to 14 May 2021 due to another surge in COVID cases, 99.6 PERCENT of fit currency requirements of banks were sourced from CSA (44 MILLION pieces amounting to PHP34 BILLION).
The CSA clearly provides currency requirements of banks during challenging times when the central bank has limited operations.
Collaborative partnerships among stakeholders is key in achieving an innovative currency management system ensuring undisrupted adequate supply of currency.
rior to the implementation of the Cash Service Alliance (CSA), banks withdraw from the BSP all their fit currency requirements.
Owing to the challenge of transporting cash during lockdowns and the need to continuously provide cash to the public, the CSA facilitated direct exchange among banks of fit currency. The BSP provided the guidelines and an online facility wherein Client Banks enter online their fit currency requirements, while Source Banks provide their available fit currency holdings.
The CSA ensured that proper and secured procedures are observed. It strengthened cooperation among banks and enabled their proactive role in currency circulation management.
The Cash Service Alliance led to undisrupted supply and efficient distribution of fit currency.
During the strict localized lockdown in Metro Manila in 2020 where the BSP’s Cash Department is located, the BSP was constrained to divert some banks to withdraw currency with the nearest central bank branch 72 kilometers away. Consequently, the BSP closely coordinated with the Bankers Association of the Philippines to fast track the implementation of the Cash Service Alliance (CSA) and formalize the direct exchange of fit currency.
Out of the 31 banks being served by the BSP in Metro Manila, 28 banks or 90 percent have actively participated in the CSA to meet their currency requirements. As a result, 147 MILLION PIECES of fit banknotes amounting to PHP116 BILLION were sourced from the CSA. These represent 72 percent in value and 55 percent in volume of fit currency requirements of banks. Comparing January to May 2021 data from previous year data, currency withdrawals by banks were lower by 19 percent and 32 percent in terms of value and volume, respectively. The CSA clearly provides an alternative source of banks’ fit currency requirements.
During the recent imposition of stricter lockdown due to another surge in COVID cases in March to May 2021, the BSP had limited operations. As a result, 99.6 percent of currency requirements of banks were sourced from the CSA.
With the implementation of the CSA, local commercial banks observed reduced trips to and from the central bank and savings in withdrawal service fees. The CSA maximizes the utilization of fit Philippine currency through efficient circulation.
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