BSP Unlikely to Approve More Digital Banks in Near Future – Incoming BSP Governor

Aspiring digital bank applicants may still wait for two to three years before they can seek a license from the Bangko Sentral ng Pilipinas (BSP), according to the incoming governor Felipe M. Medalla. The next chief noted that the central bank still needs to improve its capacity to regulate these kinds of lenders.

He added that the management of the central bank must be “very, very careful” with these digital institutions.

“Our ability to regulate must also grow. We don’t hate competition but we better have the capacity to regulate, and not be outstripped by growth of what we regulate,” Medalla stated.

When asked about how long should applicants wait for the central bank to gain more experience in the supervision of digital banks he answered, “maybe two or three years.”

“Our capacity will be equal to the tasks that we can clearly say ‘anyone who wants to come in and meet the capital requirements and the technical requirements’ (can come in),” he explained.

In December 2020, the BSP approved to recognize “digital bank” as a new bank category separate from existing bank categories, making it the seventh bank category in the Philippines.

In 2021, the central bank approved the licenses of six digital banks, namely: Overseas Filipino Bank of Land Bank of the Philippines (March 25, 2021); Tonik Bank of Singapore (June 3, 2021); UNObank of Singapore (June 3, 2021); UnionDigital of Union Bank of the Philippines (July 15, 2021): GOtyme of Robinsons Bank Corp. (August 12, 2021); and Maya Bank, owned by PayMaya of PLDT Inc. (September 16, 2021). Supposedly, there should be seven approved digital banks for the next three years but the remaining applicants failed to meet the requirements.

Previously, after closing the applications in August last year, Governor Benjamin E. Diokno announced the possibility to reopen the window for digital bank license applications if additional neobanks are needed. (Read more: Bangko Sentral to Reopen Digital Bank Applications If Needed)

Further, Governor Diokno also recognized that the rise of digital banks is a “game-changer on the delivery of financial products and services from traditional brick-and-mortar banks.” (Read more: Rise of Digital Banks a ‘game-changer’ – Bangko Sentral)

On the other hand, the next governor of the BSP also expressed recently that he is not keen on regulating cryptocurrency and dismissed it as based on the “greater fool theory.” (Read more: Incoming BSP Governor Dismisses Crypto, Not Keen in Regulating)

Last March, the BSP announced that it will pursue the pilot project of a wholesale CBDC as part of its aim to promote the stability of the country’s payment system. (Read more: BSP CBDC Digital Currency Initiative Scheduled for Q4 2022)

This article is published on BitPinas: BSP Unlikely to Approve More Digital Banks in Near Future –Incoming BSP Governor

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