621 GLOBAL PESO NOTES

621 GLOBAL PESO NOTES

The following are the guidelines on the regulatory treatment of investments of banks in Global Peso Notes (GPNs) issued by the Republic of the Philippines:

a. Investments in GPNs shall be recorded in the RBU books of a bank as a foreign currency-denominated asset in accordance with the provisions of the Philippine Financial Reporting Standards/ Philippine Accounting Standards at their foreign currency amount and local currency equivalent;

b. Investments in GPNs that are classified at fair value shall be subject to mark-to-market valuation and shall be valued similar to other foreign currency-denominated securities traded abroad;

c. Investments in GPNs shall be subject to a credit risk weight of twenty percent (20%) for purposes of computing a bank’s risk-based CAR;

d. Investments in GPNs shall be excluded in the computation of a bank’s daily net foreign exchange position;

e. Trading of GPNs shall be subject to pertinent securities laws and provisions, including the appropriate licensing of dealers;

f. Pursuant to Sec. 350, investments in GPNs shall be excluded by government FIs in determining compliance with DOSRI ceilings; and

g. Risks attendant to investments in GPNs shall be captured under a bank’s Internal Capital Adequacy Assessment Process such that investing institutions must manifest their approach in handling the risks attendant to holding/trading GPNs.