BSP poised to deploy anti-shock measures
Kathleen Martin (The Philippine Star) - January 8, 2014 - 12:00am

MANILA, Philippines - The Bangko Sentral ng Pilipinas is ready to deploy policy measures if necessary as the economy is still plagued by uncertainties following the US Federal Reserve’s tapering of its stimulus program and rising inflation, BSP Governor Amando Tetangco Jr. said during the regular Tuesday Club  meeting at the EDSA Shangri-La Hotel.

Tetangco said the central bank will continue  to monitor developments here and abroad. “We will continue to keep our ears to the ground. I think this is important because things are evolving, markets are moving,” he said.

“As needed, we will continue to deploy measures from our menu of monetary policy tools and other measures to ensure that domestic liquidity is sufficient to fund economic activity in a sustainable manner,” he added.

He further said “We have for instance adopted macroprudential measures to ensure that the financial system would remain resilient against volatilities.”

Tetangco cited the refinements made by the central bank on its Special Deposit Account in order to curb excessive volatility in markets and allow funds parked in the facility to be invested in other activities that will benefit the economy.

“We will also continue to maintain a comfortable level of reserves,” Tetangco said.

 The country’s gross international reserves  amounted up to $83.7 billion in end-2013, enough to cover a year’s worth of imports of goods and payments of services. The reserves serve as a buffer against liquidity shocks that can strike the domestic economy.

“We’ll also further refine banking regulations to ensure that these regulations are responsive, consistent with best practice and in line with the international reform agenda,” Tetangco said.

“In addition, we will persist in building our supervision because financial systems have moved forward and we can see more practices - banking practices, investment strategies, financial products,” he continued.

The local banking system has continued to be well-capitalized, indicating its strength and stability.

Latest BSP data showed the capital adequacy ratio of universal and commercial banks settled at 17.75 percent on solo basis and 18.89 percent on consolidated basis in the first quarter of the year.

This is well-above the central bank’s requirement of a 10-percent CAR and the international standard of eight percent.

Tetangco enumerated the possible BSP actions in light of risks the domestic economy faces this year.

For one, he said, “global economic growth is likely to remain in low gear in 2014.”

“The good news is that policy makers in advanced economies appear to be making some progress in stirring their respective economies toward more sustainable economic growth,” he said.

BANGKO SENTRAL CONTINUE ECONOMY FEDERAL RESERVE GOVERNOR AMANDO TETANGCO JR. PILIPINAS SHANGRI-LA HOTEL SPECIAL DEPOSIT ACCOUNT TETANGCO TUESDAY CLUB
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