Benjamin Diokno prioritizes continued banking reforms

MANILA, Philippines — Newly appointed Bangko Sentral ng Pilipinas Governor Benjamin Diokno laid down yesterday his priorities at the central bank after relinquishing his post as head of the Department of Budget and Management (DBM).

In his last Breakfast with Ben forum, Diokno said he intends to continue the reforms initiated by his predecessor, the late governor Nestor Espenilla Jr. who died last Feb. 23 after battling tongue cancer for more than one year.

Diokno, 70, said he would pursue steady strong growth as a policy on top of the BSP mandate of ensuring price stability.

The new BSP chief also said he would focus on integrity of the banking and financial system as well as the financial inclusion program championed by the late central bank governor. “We will continue all those. We will pursue the same thing,” Diokno said.

Furthermore, he said the central bankwould put more emphasis on fighting cyberthreats and attacks.

“I think the number one threat to any financial system in the world is cybersecurity and we will have to address that also,” he said.

According to Diokno, the decision of the Monetary Board would continue to be based on eveidence and dependent on data.

Diokno saidd he has been receiving many proposals including slashing interest rates and further reducing the reserve requirement ratio or level of deposits banks are required to keep with the central bank due to easing inflation.

“Of course there are many proposals like cut the RRR or cut the interest rates now as inflation is tapering off so much. But the decisions of the Monetary Board are evidenced-based and after careful analysis,” Diokno said.

The central back lifted interest rates five times from May to November last year for a total of 175 basis points to keep inflationary expectations well anchored. Inflation soared to 5.2 percent last year from 2.9 percent in 2017 and exceeded the BSP’s two to four percent target range.

However, the BSP paused from its tightening episode and kept interest rates unchanged in December last year and February as inflation eased after peaking at 6.7 percent in September and October last year.

The next rate-setting meeting of the BSP is scheduled on March 21.

The former budget secretary said he would now be more circumspect as BSP governor as his comments could influence the financial markets.

“I’m not supposed to be accessible to everyone. Instead of making frank, to the point, blunt statements like I do here at the DBM, my statements have to be measured... not necessarily a monk but more private than usual,“ Diokno csaid.