Gov’t maps out financial strategy vs global shocks

MANILA, Philippines — An inter-agency council has prepared a roadmap that would allow the Philippines to survive external shocks brought about by the possible global growth slowdown.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Financial Stability Coordination Council (FSCC) is deliberately forward-looking in its desire to guard the financial system against brewing systemic risks that can have negative consequences on the real economy and on the public.

FSCC is composed of the BSP, Department of Finance (DOF), Insurance Commission, Philippine Deposit Insurance Corp. (PDIC), and the Securities and Exchange Commission (SEC). It is the venue for financial market authorities to identify, monitor, manage, and mitigate the build up of systemic risk in the Philippine financial system. 

In its second quarter meeting, the council assessed the impact on the Philippines of a possible global growth slowdown.

 “The FSCC’s mandate is to introduce timely and appropriate macroprudential policies which are meant to look after the safety and soundness of the financial system and its payments mechanism. Keeping the financial system healthy allows consumers to maximize the benefits of finance while avoiding any costs from possible disruptions,” Diokno said.

Diokno, who is also chairman of the FSCC, said the FSCC specifically focused on credit, liquidity and investment risks as well as the availability of long-term funds in support of the government’s Build Build Build program.

 “We worked against the backdrop of an anticipated global growth moderation. We agreed on a number of possible interventions, from shorter term initiatives to our longer term goals. This leaves us with a roadmap geared towards sustaining market resiliency,” he said.

While the financial market remains on solid footing, the BSP chief said policy direction clearly set by the massive infrastructure build up and a healthy financial system are all the more important to be able to provide diversified sources of funding as well as to be resilient relative to possible shocks.

The objective, Diokno said, is to align the needs of a growing economy with a sound and responsive financial system.