MANILA, Philippines — The Philippines is “effectively mitigating” the threats to local economy brought by the coronavirus pandemic, but the country’s top financial market regulators are urging stakeholders to remain vigilant against the emergence of systemic risks.
In a press briefing on Wednesday, the heads of government agencies that make up the Financial Stability Coordination Council highlighted the strength of the country’s financial sector which, although not as good as last year’s, reflect the benefits having implemented past reforms.
“We all recognize the complications that COVID-19 has brought upon the Philippine economy, and more so to our households, friends, and loved ones,” the council’s chair, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said. “But while our daily lives have changed since the pandemic, we should look beyond our current circumstances and prepare for tomorrow. Doing so will give us direction and purpose, understanding the recent past but be better for the future.”
The group is composed of the BSP, the Department of Finance, the Insurance Commission, the Philippine Deposit Insurance Corporation and the Securities and Exchange Commission. It is the venue for financial market authorities to identify, monitor, manage and mitigate the build up of systemic risks — defined as disruptions to the financial system which can negatively affect the rest of the economy.
Finance Secretary Carlos Dominguez III said that the council’s latest report — now issued semiannually, instead of annually — painted the country as “a picture of strength in the face of adversity.”
“While it may not be as glowing as last year’s report, it shows how years of work in fortifying our financial sector have prepared us well for this difficult time,” the report highlights the importance of crafting responsive fiscal and monetary policies to support recovery and help Filipinos return to their means of livelihood.
“More importantly, this [report] demonstrates that we are effectively mitigating the adverse effects of the pandemic on our domestic economy,” Dominguez added.
At the launch the second semester report, Diokno said the Council made the deliberate decision to shift from an annual to a semestral release of the study as a response to the fast-changing conditions in 2020.
For his part, Philippine Deposit Insurance Corp. president Roberto Tan said that the banking industry remains strong despite COVID-19 pandemic, even as he reminded people not to be complacent even in the presence of the country’s deposit insurance safety net.
He also noted the effect of COVID-19 on household and corporate incomes, and the global concern over debt servicing, as well as what the council referred to as “slow burn contagion where vulnerabilities at the firm level could spread to other firms.”
Securities and Exchange Commission chair Emilio Aquino added that, given prevailing conditions, “liquidity is coveted, credit has slowed, and risk premiums have risen,” and added that there is “rational risk-aversion for a market under uncertainty.”
Insurance Commission commissioner Dennis Funa reiterated that the council’s policy intervention has always been geared towards the enhancement of the welfare of financial consumers.
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