September 9, 2009

Central Bank hires private printer to destroy paper money

The Bangko Sentral ng Pilipinas (BSP), who just alloted P2 billion to acquire a brand new currency printer, has been outsourcing the shredding and burning of defective security paper used for printing money to a private company located in Marikina.

Sources close to the Monetary Board, the central bank’s policy-making arm, said Monetary Board members were not informed that the Security Printing Complex (SPC), headed by assistant governor Eve Avila, has outsourced the destruction of security paper to a paper manufacturer and notebooks maker, Noah’s Paper Mills

But the same sources said even without approval, deliveries started this month and at least two BSP armoured vehicles pick up the defective security paper from SPC three times a week for disposing. It was also disclosed that a special armoured car carrying higher-valued banknotes are scheduled every Saturday.

BSP officials were alarmed that SPC did not seek Monetary Board approval to contract a private company to handle the security paper used for making currency notes. The defective security paper was bought from a Spanish papermaker in 2004 to print P100 banknotes.

The Monetary Board is composed of seven members and chaired by the BSP governor, Amando M. Tetangco Jr. who has been with the central bank for more than 30 years. The rest of the board members, with the exception of twice re-appointed Raul Boncan, took on the job only in 2005 while Ignacio Bunye, former press secretary, was appointed last year.

The Monetary Board has already ordered SPC to submit a production report to account for volume and spoilage. BSP can print up to one billion pieces of banknotes at different denominations per year.

Sources said about six percent of SPC spoilage are destroyed but Monetary Board members want to know how defective money is being disposed of.

The BSP is already mired in controversies especially in the bidding of new currency printers.

It is planning to buy a superline currency printing press. The original proposal, which was approved by the Monetary Board in 2007, was to buy two superline printers but a decision was made last month to cut the budget by half.

Because of parties pushing for a negotiated bid, which would blow up the cost by as much as P2 billion, the Monetary Board has ruled that a straight out bidding process will be done.

Once the new printer is acquired, it will replace two printing presses, bought in the 1980s. BSP’s money shredding activities are also done in the Quezon City plant

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