Feb. 2 (Bloomberg) -- Diwa Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas in Manila, comments in an interview on the possibility of the Philippines using the yuan as a reserve currency and for trade settlement.
On international reserves:
“We are slowly studying the matter. We hold reserves on the basis of certain criteria. One of the requirements is for trade and debt servicing. We don’t have much debt with China. Most of our loans are denominated in yen and the U.S. dollar. If you will choose the denomination of your reserves, you have to weigh the economic importance of that country that is issuing that currency.
‘‘There’s no doubt that China is a very important country. It’s now the world’s second-largest economy.”
The Philippines isn’t ready to use the yuan as a reserve currency “until such time that you can really justify that China is actually important to us in terms of investment, trade and official development assistance and services.
‘‘Chinese labor is cheaper, so our overseas workers don’t even go to China. We bring them to the Middle East where labor is in shortage.’’
On trade settlement:
‘‘We have a very liberal foreign-exchange regulatory system. We don’t require exporters, whether to China, Japan, or the U.S., to surrender their foreign-exchange earnings with the banks. They can keep their money outside of the Philippines.’’
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