BSP weighs demonetization proposal to curb corruption
The proposal was originally raised by former Finance Secretary Cesar Purisima, who suggested withdrawing high-denomination bills from circulation following the testimony of former Bulacan 1st District Engineer Brice Hernandez, who claimed he delivered over 20 suitcases allegedly containing around P1 billion in cash to former Ako Bicol Partylist Representative Zaldy Co.
Bangko Sentral ng Pilipinas Governor Eli Remolona described as ‘tantalizing’ the proposal to demonetize P1,000 and P500 bills as a deterrent against money laundering. He noted that while demonetization could indeed help reduce corruption and money laundering, it also carries significant economic and logistical drawbacks. ‘It’s not so simple,’ Remolona said. ‘To me, it's like, you know the saying: cut off your nose just to spite your face? You're doing more damage than benefits.’
Photograph courtesy of BSP
The Bangko Sentral ng Pilipinas (BSP) is studying the potential risks and benefits of demonetizing P500 and P1,000 bills as a preventive measure against “illegal activities,” BSP Governor Eli M. Remolona Jr. said during a press briefing on Monday, 13 October 2025.
Describing the idea as a “tantalizing proposal,” Remolona noted that while demonetization could help reduce corruption and money laundering, it also carries significant economic and logistical drawbacks.
Not so simple
“It’s not so simple. To me, it’s like, you know the saying: cut off your nose just to spite your face? You’re doing more damage than benefits,” he said.
The proposal was originally raised by former Finance Secretary Cesar Purisima, who suggested withdrawing high-denomination bills from circulation following the testimony of former Bulacan 1st District Engineer Brice Hernandez, who claimed he delivered over 20 suitcases allegedly containing around P1 billion in cash to former Ako Bicol Partylist Representative Zaldy Co.
Remolona, who served at the Federal Reserve Bank of New York for 14 years, cited a similar debate in the United States regarding the use of $100 bills in the illegal drug trade.
Not that easy
“But when we looked closely at the issue, this $100 is so often used by regular people. Just to slow down a little bit what drug dealers do, you’re going to make it very difficult for many Americans? So hindi ganun kadali (it’s not that easy), so in the end, we decided not to do it,” he said.
The BSP currently mandates banks to report transactions exceeding P500,000 under the Covered Transactions Report (CTR) framework.
Remolona added that banks likewise file Suspicious Transaction Reports (STRs), which include details on sources of funds and assess whether a transaction aligns with the parties’ declared net worth.
On 18 September 2025, the BSP also issued Circular No. 1218, which directs regulated institutions to ensure that all transactions worth P500,000 or more, or their equivalent in foreign currency, are carried out through traceable channels, such as checks, online fund transfers, direct account credits, or digital payments, to help curb money laundering risks.
Easier to connect the dots
“We’re looking at that, trying to enhance it so that it’s easier for us to connect the dots,” he said. “Essentially, you use that to connect one bank account, many bank accounts to one, or one bank account to many.”
Remolona, who also chairs the Anti-Money Laundering Council, reaffirmed the BSP’s commitment to finding solutions to improve efficiency in the handling of STRs in their fight against illicit financial activities.