Policy rationale for ending SDAs
- The Circular-Letter states that foreign exchange earners are allowed under CB Circular 1353 to have free disposition of their foreign exchange receipts and acquisitions.
- The Circular-Letter states that foreign exchange earners can retain all such receipts and acquisitions.
- The Circular-Letter concludes that maintaining regulated Special Deposit Accounts (SDAs) is unnecessary and has no practical utility or purpose.
Treatment of existing SDA accounts
- Foreign exchange earners with existing SDAs are allowed to withdraw existing balances in their respective SDA accounts either in foreign exchange or in its peso equivalent.
- Foreign exchange earners may alternatively transfer existing SDA balances to a foreign currency deposit account under CB Circular 343/547.
- Parties holding SDAs are instructed to be advised that these options are available for their current SDA balances.
Limitation on validity and issuance of SDA authority
- The Circular-Letter directs that the Central Bank will no longer extend the validity of any SDA authority that has expired or is about to expire.
- The Circular-Letter prohibits the grant of any new SDA authority to any person or entity earning foreign exchange.
Implementation through client advisories
- The Circular-Letter requests that responsible parties advise their clients with existing SDAs of the available actions regarding SDA balances.
- The Circular-Letter requires client advisories to cover the two balance-handling options: withdrawal (foreign exchange or peso equivalent) and transfer to a foreign currency deposit account under CB Circular 343/547.
- The Circular-Letter requires client advisories to include that no further SDA authority extensions will be granted for expired or expiring authority.
- The Circular-Letter requires client advisories to include that no new SDA authority will be granted to foreign exchange earners.
Relevant Central Bank circular cross-references
- CB Circular 1353 is identified as the basis for allowing foreign exchange earners free disposition and retention of foreign exchange receipts and acquisitions.
- CB Circular 343/547 is identified as the basis for transfer of SDA balances to a foreign currency deposit account.