The Bangko Sentral ng Pilipinas (BSP) is studying a proposal to withdraw the country’s highest-denomination banknotes — the P500 and P1,000 bills — amid growing concerns about their use in illicit financial activities.
The idea, first raised by former Finance Secretary Cesar Purisima, was described by BSP Governor Eli Remolona Jr. as a “tantalizing proposal” but one that could do more harm than good.
“It’s not so simple,” Remolona said during a Monday briefing. “It’s like that saying — cutting off your nose to spite your face. You’re doing more damage than benefits.”
Purisima’s suggestion came after Senate hearings revealed that around a billion pesos worth of high-denomination bills allegedly found their way into suitcases and vans reportedly linked to Ako Bicol Rep. Zaldy Co and the so-called ghost flood-control projects under the Department of Public Works and Highways.
Global context and local caution
While several countries have demonetized large bills to curb money laundering and illegal trade, Remolona — who previously served at the Federal Reserve Bank of New York — warned that such a move often backfires.
He recalled that the U.S. once debated removing the $100 bill due to its use in the drug trade. “But when we looked closely, the $100 is so widely used by regular people. Just to slow down a little bit what drug dealers do, you’re going to make life difficult for millions of Americans? It’s not that easy. So in the end, we decided not to do it,” he said.
Strengthening oversight and digital tracing
Instead of demonetization, the BSP is ramping up efforts to make large transactions more traceable. Under Circular No. 1218 issued last month, transactions worth P500,000 or more must now be conducted through traceable channels — such as checks, online transfers, direct credits, or digital payments — to minimize money-laundering risks.
Banks are also required to submit covered transaction reports (CTRs) for high-value transactions and suspicious transaction reports (STRs) that include details on fund sources and the financial capacity of the parties involved.
“We’re enhancing these systems so it’s easier for us to connect the dots,” Remolona explained. “Essentially, it lets us link one bank account to many, or many accounts to one.”
Banks welcome new rules
Remolona said banks have expressed support for the stricter reporting requirements, noting that they now have stronger grounds to flag questionable transactions. “They’ve always been suspicious of some transactions but couldn’t refuse. Now they can say, ‘BSP policy yan,’ so it makes their life easier,” he said.
The BSP is also exploring advanced digital tools to help the Anti-Money Laundering Council (AMLC) — which Remolona chairs — better analyze the thousands of STRs it receives. “We’re looking for solutions that can tell us which ones really need to be looked into first,” he added.
While demonetization remains on the table, the BSP chief made it clear that the central bank’s current focus is on smarter, data-driven monitoring — not abrupt, disruptive measures.