Internationalize

Speaking  before a Filipino audience in Paris, President Aquino boasted that an international banker suggested that the peso be “internationalized.”

This banker should be identified. He was pulling our President’s leg and our President seemed happy about it.

Aquino promptly declared he will ask Finance Secretary Cesar Purisima to study the matter. Purisima, for his part, should have caught Aquino before he stumbled on this one. He did not.

Whatever is meant by “internationalizing” the Philippine peso?

I suppose what is envisioned here is that more and more international financial institutions are denominating their loans to us in our currency and more and more traders are booking their contracts in pesos. Maybe it also means that more and more of our expatriate workers will be paid in pesos (a prospect they will likely resist).  

Whatever is meant by “internationalizing” the peso, it is obviously not a matter for us to decide on. It is a matter for the international market to decide on depending on whatever financial efficiencies this might produce.

In a word, it is a market decision made globally rather than a policy decision made locally.

There is no indication the global market prefers the peso as the definitive currency of international finance and trade. We are not an exporting superpower. We do not consume enough of any commodity to influence its pricing — let along dictating it in peso terms. Certain key commodities are traditionally priced in dollars, such as oil.

 We rank about 14th in terms of population. We rank much less than that in economic size. Indonesia is a trillion-dollar economy. We are not.

Our entire banking system is smaller than some of the banking giants in the region, including Malaysian banks (even if they have a smaller population). This is the reason our banks are rapidly consolidating to compete more effectively with the large banks in the ASEAN. Banking in the region will be liberalized next January and we are barely prepared for it.

China is the world’s second largest economy with some of the largest banks in the world. She is an export juggernaut and attracts trillions of dollars in investments. Alibaba, a Chinese technology company, just launched the world’s largest initial public offering (IPO) at the New York Stock Exchange. Chinese conglomerates are acquiring companies worldwide. Chinese tourists (at least until Beijing issued an advisory earlier this month) are second only to Koreans coming over as tourists.

Yet, the Chinese yuan could hardly be called an “international currency.” No major commodity, not even rare earths, are priced in yuan in the international market. The reason is that few banks would care to hold large amounts of yuan in its vaults, notwithstanding the historical stability of that currency.

Will the rest of the world want to be awash with pesos? Will we want that?

It is tough enough for our monetary authorities to calibrate our domestic money supply. A few weeks ago, it was reported the BSP was having difficulty supplying local demand for the currency. Do we really want trillions in peso-denominated bonds floating out there?

Aquino should name this banker who titillated him with the idea of “internationalizing” the peso. He could be laughed out of a career.

Distraction

Instead of distracting us with fantastic but purposeless things such as “internationalizing” the peso, Aquino might serve our people’s attention span better by telling us what is being done about problems besetting us, making us miserable each day.

For instance, he could give us a timeline about the flood control projects so that the metropolitan area does not bog down during a minor storm.

Nothing will excite us more than the President telling us a solution to the impending power crisis that will not impoverish consumers has been found. Or, that the port congestion problem will be solved ahead of Christmas. Or, that Angat Dam will finally be retrofitted so that it does not break, wiping out parts of Bulacan and drying up the national capital region for years.

Instead of this tall tale about “internationalizing” the peso, Aquino might make us happy by outlining a comprehensive plan to get traffic moving, making it possible for millions in the metropolis to do more work. Please, Mr. President, make our day by saying the streets are safer, the prices of basic goods stable and the police actually trustworthy.

All this talk of an “internationalized” peso falls into the pattern of distraction we have been treated to of late. Instead of telling us what might get done by the end of the term, Aquino indulges in talk of extending that term. Instead of taking a serious look at how Malampaya funds might have been drawn into the DAP whirlpool, the pro-Aquino Senate would rather obsess about a Makati building.

All the dazzling distraction intends to refocus the public away from the gruesome incompetence of Aquino’s men, especially his cronies at the LP such as the one who runs the DOTC, the one at DA and the one heading the DILG.

The LP is precisely behind the broad campaign of distraction. They are weavers of the emperor’s new clothes, pandering to his vanities without delivering anything real.

They say the problems at the MRT will be solved next year when in fact all we are getting in 2015 is a prototype carriage that may or may not run on the system. None of the much-vaunted PPPs will be delivered by the end of Aquino’s term. The police is demoralized by Aquino’s support for his favorite PNP chief.

Incompetence reigns.