BSP to pursue reforms under new leadership

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is committed to pursue liberalization initiatives as well as capital market reforms amid the scheduled changing of the guards in the central bank next week.

Incoming BSP Governor Nestor Espenilla Jr. said in his speech during the cocktail reception hosted by the Bankers Association of the Philippines (BAP) his leadership would continue with reforms that have helped improved the ability of banks to absorb shocks and certain imbalances.

“We have strengthened governance and risk management standards as benchmarks for good banking. We have adopted global reforms and standards and made sure these are in tune with our own domestic needs and requirements,” he said.

Espenilla, who is scheduled to succeed outgoing BSP Governor Amando Tetangco Jr. on July 2, said the banking system continued to be a source of strength and is well-positioned to further support the growing needs of the domestic economy.

“Governor Tetangco, my mentor, is leaving a legacy of excellence. He is instrumental in transforming the Philippines from being the economic laggard in Asia to one of the region’s best performing economies. While I am delighted to succeed him, I know I have very big shoes to fill,” Espenilla said.

Espenilla said the central bank would continue to move toward more market-based execution of monetary policy particularly with the shift to the interest rate corridor (IRC) system in June last year.

He added the BSP would also continue to pursue capital market reforms to provide a viable alternative source of financing for long-term investments, including the development of the necessary financial market infrastructures.

Monetary authorities would pursue liberalization initiatives to achieve more risk-based, transparent, and market determined policy framework, according to Espenilla.

“With respect to liberalization initiatives, we intend to further liberalize the provision of financial products and services, including our existing rules on foreign exchange transactions,” he said.

Espenilla said the BSP would push through with the reshaping of the financial system by providing an efficient retail payment system under the National Retail Payment System (NRPS) to be fully responsive to the needs of the country’s growing economy.

 “This would entail providing for efficient retail payments under the NRPS project and an enabling regulatory environment for financial technology and for digital finance to develop without sacrificing prudent credit underwriting and information security standards,” he said.

Tetangco, for his part, urged members of the BAP to extend their full support to Espenilla who vowed continuity.

“Our banking industry is undoubtedly on solid footing but there continue to be critical challenges ahead,” he said.