ING, HSBC heap praises on BSP, Tetangco
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is a shining example of how things should be done during a global or regional financial crisis, and how to manage an economy with sound monetary policy, leading global investment bankers said.
ING chief economist for Asia and research head for financial markets Tim Condon also described BSP Governor Amando M. Tetangco as the “best central banker in the world.”
He said the BSP has shown that there is an alternative for dealing with “hot money.”
“Instead of heavy intervention in the foreign exchanges and sterilization in the money market practices in most of Asia, the BSP has shown that there is an alternative for dealing with hot money,” the ING chief economist said.
He added: “With short term interest rates not hostage to an exchange rate target, the effectiveness of the central bank’s policy interest rate for controlling inflation would increase, having market-driven interest rates and using core inflation as a policy target.”
Likewise, HSBC president and chief executive officer for the Philippines Tony Cripps said “the Philippine central bank has done an excellent job thus far of managing monetary policy.”
“This move (reappointment of Tetangco) provides continuity and stability and should go a long way towards further improving business and investor confidence,” Cripps added.
Meanwhile, the Europe-based ING Bank said the BSP did not roll over some of its maturing foreign exchange currency swaps. The resulting injection of money market liquidity pulled short-term interest rates lower, which eased the pressure on the peso’s appreciation.
Thus, it tightened the tap on peso flows by shutting down onshore borrowing rates.
“The swift action in fact surprised local market players and was quite effective in calming the markets,” Consuelo Garcia, ING Bank country manager in the Philippines, said in a statement.
With a prudent but flexible monetary policy, fiscal consolidation, high government credibility, a healthy banking sector, record-high gross international reserves, and external liquidity, the Philippine economy could easily grow 5.3 percent. However, ING Bank forecast is still on the conservative side, as it does not include accelerated spending for the Public-Private Partnership (PPP) infrastructure program of the Aquino government.
Earlier, Finance Secretary Cesar Purisima called the reappointment of Tetangco “a home run.”
He added that the appointment would provide continuity and stability in the management of the country’s financial system.
Last Thursday, Tetangco accepted President Aquino’s offer for a second term as BSP governor. He is the first central banker in the Philippines to be reappointed under the 6-year constitutionally-protected position.
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