BSP weighs proposal to scrap P500, P1,000 bills to curb dirty money

The Bangko Sentral ng Pilipinas (BSP) is carefully studying a proposal to demonetize the ₱500 and ₱1,000 bills to curb their alleged use in illegal activities, Governor Eli Remolona said last week.

Remolona described the suggestion from former Finance Secretary Cesar Purisima as a “tantalizing proposal,” but warned that such a move could cause more harm than good.

“It’s not so simple. You know the saying, ‘cut off your nose to spite your face’? You’d be doing more damage than benefit,” Remolona said during a briefing.

Purisima made the proposal following revelations in Senate hearings that about ₱1 billion worth of high-denomination bills were reportedly used in ghost flood control projects, allegedly linked to Ako Bicol Partylist Rep. Zaldy Co.

Remolona, who previously worked with the Federal Reserve Bank of New York, recalled that a similar idea to phase out the USD100 bill in the U.S. was ultimately shelved. “The $100 is so often used by regular people. Just to slow down what drug dealers do, you’re going to make it difficult for many Americans? So hindi ganun kadali,” he explained.

Instead of demonetization, Remolona said the BSP is tightening safeguards through transaction monitoring. Banks are now required to report all transactions worth ₱500,000 or more and file suspicious transaction reports detailing fund sources and legitimacy.

He added that the BSP issued Circular No. 1218 in September, mandating traceable payment methods—such as checks, online transfers, or digital payments—for transactions of ₱500,000 and above to reduce money laundering risks.

“Banks actually like the policy because now they can say, ‘BSP yan eh,’ when they need to question certain transactions,” Remolona said.

He added that the BSP and the Anti-Money Laundering Council are exploring digital tools to better identify and analyze suspicious activities among thousands of reports received.