BSP eyes tighter e-money rules to protect consumers

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February 28, 2026 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is proposing amendments to its electronic money regulations that will tighten liquidity safeguards, strengthen trust arrangements and introduce recovery planning requirements for non-bank electronic money issuers (EMIs).

In a draft circular, the central bank said EMIs promote the use of digital financial services in the Philippines by enabling Filipino consumers to access fast, safe and reliable digital transactions.

“The proposed policy amendments aim to strengthen the protection of e?money holders and promote financial stability by establishing uniform liquidity requirements across EMIs, clarifying regulatory expectations on trust arrangements and introducing proportionate recovery planning for non-bank EMIs to ensure timely intervention in the event of financial distress,” the BSP said.

Under the proposal, EMIs will be required to maintain unencumbered liquid assets equivalent to their outstanding e-money balances. At least 50 percent of the outstanding balance must be held in trust specifically for e-money balance liquidation, with the trust arrangement ensuring preservation of principal and prudent management of funds.

The remaining portion may be held in other liquid assets earmarked for redemptions, including bank deposits, government securities, settlement account balances with the BSP and other liquid assets that may be allowed by the central bank, provided these meet high-quality liquid asset standards under the Basel III liquidity framework.

The BSP said these assets would remain restricted and may only be released upon authorization, particularly if a recovery plan fails.

The draft circular also introduces formal recovery planning requirements for EMI non-bank financial institutions, requiring them to develop plans that allow a “quick, effective and credible response during periods of financial stress” to protect customers and maintain viability.

These plans must be aligned with risk management, capital and liquidity planning as well as business continuity strategies to be submitted annually to the BSP on June 30.

Minimum components include identification of critical services such as wallet operations and settlement systems, early warning indicators tied to capital and liquidity, stress scenarios like cyberattacks or mass redemption events as well as periodic testing of recovery strategies.

A key feature of the proposal is the BSP’s authority to take control of liquid assets once an EMI reaches a “point of non-viability,” defined as the stage where the institution can no longer continue operations without intervention and has no reasonable prospect of recovery.

At this stage, the BSP or a designated manager or receiver may assume control over trust assets and liquid funds earmarked for e-money redemption to ensure orderly settlement of customer claims.

The trust agreement must explicitly recognize this authority, which will immediately prevail over any discretion of the EMI or other parties.

The draft also seeks to strengthen consumer protection through disclosure requirements. Users and merchants must be notified at least 60 calendar days before any changes to terms and conditions take effect.

EMIs will also be required to submit monthly certifications on month-end balances accompanied by statements of account from trust entities, detailing outstanding balances and transactions.

Existing EMIs will be given three months from the circular’s effectivity to submit compliance certifications and undertakings, while recovery plans for non-bank EMIs must be filed within six months.

Failure to comply may result in enforcement actions, including cancellation or revocation of licenses and authorities.