BSP wants to extend peso settlement hours

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Speeding Up Payments Why BSP's Plan to Extend Peso Settlement Hours Should Be a Priority in 2025

The Bangko Sentral ng Pilipinas (BSP) has proposed extending the operating hours of the Philippine Payment and Settlement System Plus (PhilPaSSplus) to a virtual 24/7 model, aiming to accelerate payments and improve liquidity management. This move is crucial in today's rapidly evolving financial landscape, where digital adoption, cross-border flows, and growing market expectations for real-time availability of funds are transforming the way we make transactions.

The Case for Extension

PhilPaSSplus serves as the backbone of the Philippine financial ecosystem, enabling the final and irrevocable settlement of large-value and time-critical transactions in central bank money. Currently, the system operates for only eight hours and 45 minutes per weekday, or 43.75 hours per week. By extending its operating hours to approximately 154 hours weekly, the BSP is poised to position the Philippines as a leader in real-time gross settlement (RTGS) operations, joining the ranks of the longest-operating RTGS systems globally.

Benefits of Extended Operations

The proposed extension offers several benefits for businesses and households alike

1. Faster Settlement Near-continuous operations enable Philippine banks and their foreign counterparts to settle transactions with minimal time gaps, reducing exposure to principal risk.
2. Improved Liquidity Management Synchronized settlement cycles for retail payment systems will reduce the build-up of clearing exposures and lower credit risk among participants.
3. Enhanced Cash Flow Faster access to funds for exporters, importers, e-commerce businesses, and overseas Filipino workers (OFWs) can improve cash flow predictability and minimize delays in receiving remittances.
4. Increased Transparency The proposal aligns with the Financial Stability Board's Cross-Border Payments Roadmap, which targets faster, cheaper, more transparent, and more accessible cross-border payments by 2027.

Challenges Ahead

While extending PhilPaSSplus' operating hours presents numerous benefits, it also comes with increased risks

1. Reduced Downtime Limited maintenance windows can compromise system resilience.
2. Heightened Exposure to Operational Failures Longer operating hours increase the risk of human error, cyberthreats, and liquidity strains.
3. Cybersecurity Concerns Strengthening cybersecurity and contingency frameworks will be crucial to minimize potential vulnerabilities.

Mitigating Risks

To address these challenges, the BSP plans to

1. Maintain a daily two-hour maintenance window for system updates and maintenance.
2. Enhance cybersecurity and contingency frameworks to ensure business continuity in case of disruptions.
3. Ensure sufficient staffing through shifting schedules to maintain system operations.
4. Establish a geographically separate secondary site to support business continuity.

Conclusion

The proposed extension of PhilPaSSplus' operating hours is a critical step towards improving liquidity management, reducing settlement risks, and enhancing the overall efficiency of the Philippine financial system. As technologists in 2025, it is essential to prioritize this initiative, leveraging innovative solutions to address potential challenges and ensure seamless operations.

Key Takeaways

1. The BSP's proposal aims to extend PhilPaSSplus' operating hours to a virtual 24/7 model.
2. This move will improve liquidity management, reduce settlement risks, and enhance the efficiency of the Philippine financial system.
3. Extended operations come with increased risks, including reduced downtime, heightened exposure to operational failures, and cybersecurity concerns.
4. The BSP plans to address these challenges through enhanced maintenance windows, strengthened cybersecurity, and sufficient staffing.

Call to Action

As we move forward in 2025, it is essential for technologists to prioritize this initiative, leveraging innovative solutions to ensure seamless operations and minimize potential risks. By doing so, we can support the Philippines' goal of becoming a leader in real-time gross settlement (RTGS) operations, ultimately driving economic growth and development.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.