QuestionsQuestions (BSP CIRCULAR LETTER)
The circular informs banks of the rules on how U.S. Treasury Warrants should be cleared and settled in the Philippines starting October 1, 1992, consistent with a U.S. Embassy note and BSP’s foreign exchange liberalization.
It asked the Government of the Philippines to notify collecting banks that they should use their U.S. correspondent collection process in clearing and settlement of TUS checks, except that Citibank Manila will clear only those TUS checks presented directly to it.
A “lipstick” TUS bears the legend: “Payable Only in Pesos through Authorized Agent Bank of the Central Bank of the Philippines and Postal Offices.”
It states that effective October 1, 1992, whether “lipsticked” or “unlipsticked,” the warrants may be deposited, encashed in foreign exchange, and/or converted into pesos at the payee’s option without prior Central Bank authorization.
October 1, 1992.
They may (1) deposit the warrants in a Foreign Currency Deposit Unit of any AAB, (2) encash them in foreign exchange, and/or (3) convert them into pesos, at the option of the payee.
It means AABs and payees do not need to obtain prior BSP/central bank approval to perform the deposit/encashment/conversion transactions covered by the circular, because rules are fully liberalized under the referenced policy.
Central Bank Circular No. 1353 dated August 24, 1992.
AAB stands for Authorized Agent Bank. The circular allows deposits in their Foreign Currency Deposit Units and requires them to use their own U.S. correspondent collection arrangements for the clearing and settlement of these checks.
AABs must use their own U.S. correspondent collection arrangements in the clearing and settlement of U.S. Treasury Warrants.
Citibank Manila will clear only those TUS checks presented by beneficiaries directly to Citibank.
It ties the BSP circular’s operational instructions to an earlier liberalization rule, showing that the foreign exchange treatment of these instruments is permitted without prior authorization because the earlier circular already relaxed related regulations.
It instructs recipients to disseminate the contents to all their branches and offices.
It was signed by Edgardo P. Zialcita, Deputy Governor and In-Charge of IOS.
Failure to comply could expose the AAB to BSP supervisory and regulatory action for violation of BSP circular directives governing banking operations and settlement/clearing processes.