An Act Amending the New Central Bank Act

Case Overview and Summary

Summary of Republic Act No. 11211 (Amendments to the New Central Bank Act):

Capitalization and Objectives of the Bangko Sentral ng Pilipinas (BSP):
- Increases the capital of the BSP to P200 billion, to be fully subscribed by the Philippine government. (Section 1)
- Defines the primary objective of the BSP as maintaining price stability conducive to balanced and sustainable economic growth and employment, as well as promoting monetary stability and peso convertibility. (Section 2)
- Mandates the BSP to promote financial stability and work closely with relevant government agencies. (Section 2)
- Authorizes the BSP to oversee payment and settlement systems, including critical financial market infrastructures, to maintain financial stability. (Section 2)

Supervision and Regulation of Banks and Other Financial Institutions:
- Grants the BSP supervision over banks, quasi-banks, and their subsidiaries and affiliates engaged in allied activities. (Section 25)
- Authorizes the BSP to regulate and examine money service businesses, credit granting businesses, and payment system operators. (Section 3)
- Requires prior BSP approval for transfers or acquisitions of at least 10% voting shares in banks or quasi-banks. (Section 9)
- Prohibits the issuance of restraining orders or injunctions against the BSP's examination of supervised entities, unless a bond is posted in favor of the BSP. (Section 25)
- Establishes a mechanism for issues arising from bank examinations, independent and reporting directly to the Monetary Board. (Section 25)

Administrative Sanctions and Enforcement Powers:
- Empowers the Monetary Board to impose administrative sanctions, including fines up to P1 million per violation, suspension of privileges, and revocation of licenses, on supervised entities and their directors, officers, or employees for violations. (Section 37)
- Authorizes the Governor to impose fines up to P100,000 per violation on banks and quasi-banks for non-compliance with regulations. (Section 37)
- Prohibits courts, except the Court of Appeals and the Supreme Court, from issuing temporary restraining orders or injunctions against the BSP's actions under the Act. (Section 38-A)
- Imposes criminal penalties, including fines up to P2 million and imprisonment up to 10 years, for willful violations of the Act or related laws and regulations. (Section 36)

Receivership and Liquidation of Banks:
- Outlines the grounds and procedures for the Monetary Board to designate the Philippine Deposit Insurance Corporation (PDIC) as receiver and initiate liquidation of closed banks. (Section 30)
- Specifies that the Monetary Board's actions on receivership, liquidation, or conservatorship are final and executory, subject to limited judicial review. (Section 30)
- Allows the BSP to lend funds to the PDIC for insurance purposes and financial assistance authorized under the PDIC Charter. (Section 36)

Monetary Policy and Financial Operations:
- Authorizes the BSP to issue, place, buy, and sell freely negotiable evidences of indebtedness for open market operations. (Section 92)
- Defines "deposit substitutes" and empowers the Monetary Board to determine specific instruments to be considered as such. (Section 39)
- Allows the BSP to impose monetary penalties for reserve deficiencies and limit or prohibit new loans or investments by banks with chronic deficiencies. (Section 101)
- Permits the BSP to formulate rules and regulations for extending financial facilities to Islamic banks, considering their unique characteristics. (Section 35)

Reporting and Transparency:
- Requires the BSP to publish monthly balance sheets, quarterly economic and financial reports, semi-annual financial system reviews, and reports on abnormal monetary movements and remedial measures. (Sections 39, 40)
- Mandates the BSP to submit an annual report to the President and Congress, including financial statements, monetary aggregates, balance of payments, and legal and administrative measures adopted. (Section 40)

Governance and Operations:
- Increases the maximum number of Deputy Governors from three to five, to be appointed by the Governor with the Monetary Board's approval. (Section 21)
- Authorizes the Monetary Board to conduct meetings through modern technologies like teleconferencing and videoconferencing. (Section 3)
- Requires the BSP to establish a reserve fund to mitigate future risks and address contingencies. (Section 24)
- Exempts the BSP from national, provincial, municipal, and city taxes on income derived from its governmental functions. (Section 45)
- Prohibits the BSP from acquiring shares or participating in the ownership or management of enterprises, with exceptions for international organizations and enterprises consistent with its mandate. (Section 128)
- Mandates the BSP to remit 75% of its net profits to a sinking fund or the National Treasury until its net liabilities are liquidated, and 50% thereafter. (Section 46)