Bangko Sentral ng Pilipinas Governor Benjamin Diokno has raised the possibility of establishing a direct settlement framework for the Philippine peso and the Japanese yen.
“BSP is keen on pursuing other areas of cooperation with Japan such as the establishment of the Philippine peso-Japanese yen direct settlement framework,” Diokno said yesterday in his speech during the virtual Philippine economic briefing for Japanese investors.
A local currency settlement framework for trade transactions, among others, aims to reduce transaction costs and foreign exchange risks.
Diokno highlighted the idea for the direct settlement framework since Japan has been among the Philippines’ major trading and development partners for a long time now.
In 2019, the BSP signed bilateral letters of intent (LOIs) on local currency settlement framework with the Bank Indonesia, Bank Negara Malaysia, and Bank of Thailand.
The BSP earlier said “the wider use of local currencies in the Asean Economic Community enhances economic and financial integration, as well as spurs further development of the foreign exchange and financial markets in the region.”*PNA