EDITOR'S NOTE: President Duterte’s draconian regime in the Philippines is looking to criminalize what it describes as “coin hoarding.” We’re not talking precious metals coins. We’re talking “peso” coins, where 1PHP is currently equivalent to $0.019; where the nickel content in the older coins is worth more than the “nominal” value of each coin. Lawmakers and citizens are having a problem with the opacity of the policy language. It fails to define what “hoarding” means. Yet the fear of inadvertently violating the law is very palpable. After all, Duterte’s drug war where an estimated 30,000 people were executed thrived on a lack of transparency, no judicial process, and fervent vigilantism. In a Manila Bulletin report dating back to October 2021, the editor writes that the Bangko Sentral ng Pilipinas (Philippine Central Bank) “pointed out that coin hoarding prevents their primary use as a medium of exchange and it ‘hampers the efficient flow of transactions and causes an artificial shortage, which is disruptive to the financial system.’” What it boils down to is this: the government’s actions over decades contributed to the currency’s devaluation. The coins aren’t even worth the metal they’re minted on. What we’re seeing is the Philippine government’s war on cash and savings. This kind of ironhanded control is what happens when a central bank and a corrupt government fail in their most basic monetary, fiscal, and social duties. It’s also one reason why arguably the Philippine central bank seems eager to get its own digital currency (CBDC) off the ground (it allows for a much more expansive control of a country’s financial system).
Coin hoarding might be illegal? Where would you draw the legal line between hoarding and having a large coin collection? These are on the table as the Philippines considers legislation that would tighter laws against currency counterfeiting and the unnecessary accumulation or hoarding of coins.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said, “These proposed measures are expected to further strengthen BSP’s currency operations covering production, distribution, deposit-taking from banks, authenticity verification, anti-counterfeiting operations, and retirement.”
The governor continued, “The proposal entails amendments to existing laws and will take into consideration the current economic landscape, as well as advancements in printing technologies,” adding, “The BSP continues to work with stakeholders towards protecting the public against the unlawful or improper use of Philippine currency.”
Philippine Senator Grace Poe added, “Reminders by the Bangko Sentral ng Pilipinas to be alert of fake bills from ATMs are disquieting and raise the question on how the bogus money can find its way into the banks’ machines. The burden of distinguishing counterfeit bills emanating from banks from genuine ones should not be placed on depositors... As keepers of the people’s money, banks must ensure state-of-the-art defenses against security breaches.”
The main thrust of the proposed law changes is aimed at counterfeiting. During November 2021 the central bank reported having executed seven enforcement operations involving the seizure of more than 500 bogus bank notes with a face value of more than 480,000 pesos within the first nine months of 2021. While that amount is exchangeable for less than $10,000 U.S. to anyone living in the Philippines this isn’t a negligible amount.
The Philippines is looking to increase the penalty for counterfeiting from its 12-year minimum prison sentence and maximum fine of 2 million pesos (about $19,500 U.S.) under the existing statute, Republic Act 10951. The conviction rate for counterfeiters in the Philippines is at 98.41 percent for those accused between 2010 and 2021.
Not as much attention has been paid to the coin hoarding provisions in the revisions of the law. In October 2021 50 million 1-peso coins were seized in a raid on a warehouse in Barangay Laging Handa, Quezon City. Smuggling is a problem regarding coins; their intrinsic value making it profitable to scrap them for their metal content. The central bank is using nickel-plated steel in current coins to discourage smuggling coin for their nickel content.
Currently anyone found guilty of hoarding can be jailed for one year and fined 100,000 pesos for every thousand coins or fraction of that amount that has been hoarded. The fine can’t be paid from the hoarded coins, which are seized by the government.
Chronic coin shortages in the Philippines have been blamed on coin hoarders as well as smugglers. Retail businesses are exempt from most hoarding rules due to using large number of coins in their daily operations. Likewise, charitable institutions, private banks, and government financial institutions that require large amounts of coinage are exempt.
Banks are required through the Anti-Money Laundering Law to question the source of coins when coins are brought to them in bulk. While the central bank insists it doesn’t want to discourage people from saving some coins in piggy banks at home there isn’t any legal definition of what constitutes hoarding that addresses what private citizens may hold. The legal definition also fails to address a significant number of coins held by an individual that the individual might insist is a coin collection.
Originally published on Numismatic News.