By Joann Santiago
MANILA, (PNA) – – A central bank executive sees seamless transactions of renminbi in the Philippines following the launch of the domestic renminbi transfer service established by the Bank of China and the PDS Group.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo, in his speech during the launch recent said putting up of the transfer service “would allow the integration of this service with the RMB global payment system.”
“We expect this to provide bank members and their clients the facility to execute real-time payments in and transfers of, RMB to domestic and international counter parties,” he said.
The central bank official said monetary officials encourage more transactions in renminbi, which he pointed out is “admittedly gaining significance and generating interest in the global market.”
He explained that China, which is the second largest economy in the world to date, “has been driving the global growth engine for many years now” thus, it has “no other option but to support more and more cross-border settlements in RMB, reform the RMB exchange rate mechanism, and establish onshore and offshore RMB investment channels.”
“To me, these are the prior steps to promote the internationalization of the renminbi,” he said.
The BSP has put in place several measures that support renminbi transactions in the country.
In 2006, the central bank’s Monetary Board (MB) approved the inclusion of renminbi in the list of convertible currencies with the BSP.
In 2008, the Board allowed the direct conversion of renminbi in the domestic economy and in 2009 the central bank introduced a program of renminbi settlement in cross-border trade transactions.
Guinigundo pointed out that “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.”
“The ability of RMB account holders to denominate, settle and clear transactions with parties conducting businesses in RMB minimizes exposure to exchange rate fluctuations of a third currency,” he said.
Guinigundo also noted that “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 RMB trade payments to/from clients who presently settle them in US dollars; and transfer charges of transactions that also currently pass through more intermediaries and manual processes,” he added.