BSP: Financial stability initiatives to be pursued
Proposals to strengthen domestic financial markets are being considered by the interagency Financial Stability Coordination Council (FSCC) amid renewed global volatility, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.
In a statement, the central bank said that FSCC met on Tuesday “to assess potential risks to the stability of the local financial system”, with the council recognizing “increased volatility in macro-financial markets where interest rates have generally become more volatile, investors have rebalanced towards safe haven currencies, and threats to global economic growth have increased.”
“To sustain the growth of the Philippine economy and in support of the infrastructure development initiatives of the government, the FSCC considered various proposals to strengthen long-term finance, enhance valuation practices for market instruments, as well as broadening its communication initiatives,” it added.
The FSCC, created in 2014, is a voluntary interagency panel that meets every quarter to identify, manage and mitigate the buildup of systemic risks under the overall objective of financial stability.
The FSCC Executive Committee is composed of the principals and senior officers of the Bangko Sentral,
Department of Finance, Bureau of the Treasury, Insurance Commission, Philippine Deposit Insurance Corp. and the Securities and Exchange Commission.
Central bank Governor Nestor Espenilla Jr. is the chairperson of the FSCC.
Financial markets, Espenilla said in the statement, “are extraordinarily volatile this year and the FSCC continuous to assess the possible impact to the Philippines of changing macro-financial conditions”.
“The challenge is to intervene early enough so that systemic risks do not build up but not too early that they derail our own growth momentum. We continue to be cognizant of this delicate balance, nurturing innovations and ideas while providing appropriate prudential oversight” he pointed out.
A collapse of the Turkish lira last Friday roiled financial markets worldwide with investors fearing that the crisis could spread globally. The peso, which lost 24 centavos on Monday, dropped another two on Tuesday to close at
P53.39 against the dollar.
The benchmark Philippine Stock Exchange index also extended a decline, declining by 1.41 percent after Monday’s 2.12-percent plunge.
Espenilla on Monday said the Philippines would not be spared from the impact of global turmoil but claimed that it was “quite resilient to external factors” given its fundamentals, policies and buffers.
“We will be affected, but we’d like to think the impact would be relatively moderate and manageable,” he said.
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