Members of ACI Philippines, FMAP, IHAP, MART, NASBI, and TOAP gathered for a joint general assembly held on September 23 2014 at the Fairmont Hotel Makati. The event started with an invocation led by FMAP President Ms. Alexandra C. Deveras, after which MART President Mr. Reynaldo Montalbo Jr. delivered his welcome remarks to the attendees. The main highlight of the event was the speech of “Convergence in Divergence” given by the guest of honor, Bangko Sentral ng Pilipinas (BSP) Governor, Hon. Amando M. Tetangco Jr., who was introduced by ACI Phils. Mr. President Cecilio D. San Pedro.
Gov. Tetangco opened his speech by mentioning that the recent successive tightening measures such as raising the reserve requirement ratio, official policy rate, and SDA rate were geared to accomplish four major objectives. These objectives are to rein in domestic liquidity growth, to manage financial stability risks (for stocks and real estate), to provide gradual non-disruptive adjustments in the future, and lastly to steer inflation expectations. He also reiterated his statement that the BSP would remain watchful of market developments and be supportive of global reforms, the implementation of which will be in a timely and flexible manner.
The good governor attributed their policy stance to the BSP’s assessment of an overall divergence in major economies such as the United States, Eurozone, and Japan in terms of their economic growth and corresponding direction of monetary policy. He mentioned that this current dissonance must be given careful consideration by the BSP in crafting its own monetary policy. He also encouraged the market to be more reticent of their actions and portfolios in this period of low volatility brought about by large liquidity in the global financial system as other central banks around the world proceed to more aggressive monetary policy easing to stimulate their respective economies, even as the US mulls raising policy rates in 2015.
To address the current state of divergence Gov. Tetangco proposed policy actions geared toward convergence whereby BSP, as the main stakeholder of its initiated reforms, and the market participants, as partners, coming together to accomplish a purposeful improvement of the Philippine financial system. While touting the current strength of the local financial system, Gov. Tetangco stressed the need for tougher reforms, such as the implementation of Basel III capital requirements and more streamlined processes for capital clearing. These measures will ensure that the nation can weather the risks, both new and old, of a world of diverging policy directions.
After the inspiring message from the BSP Governor, an open forum was held with panelists such as Ms. Cristina Arceo of FMAP, Virgilio Chua from IHAP, Antonio Danao of TOAP, Manuel Goseco of MART, Ms. Ma. Lourdes Liwag of NASBI, and Mr Noel Sugay of ACI Phils. The panelists discussed the implications of foreign ownership rules on local financial institutions, the possibility of a globalization of the Philippine Peso, as well as the relation of the actions of the U.S. Federal Monetary board to BSP’s future actions.
As the program came to a close, Mr. Elaida Bellon of Metrobank presented BSP Gov. Tetangco with a token of appreciation. Mr. Manuel Tordesillas, IHAP President concluded the event by providing the closing remarks.
By: Sheryl Uy (BPI)