Philippine Deposit Insurance Corp. (PDIC) president Jose Nograles raised local initiatives in curbing the financial slowdown as he was elected to the executive council of the International Association of Deposit Insurers (IADI) during its 7th annual conference and general meeting. The event was held at FDIC headquarters in Washington DC, and was participated in by over 200 deposit insurers, bank regulators, and members of the academe.
Nograles also spoke with FDIC chairman Sheila Bair and discussed steps to quadruple PDIC’s maximum deposit insurance coverage to P1 million, as well as to enhance the said agency’s co-regulation of banks. He also stated that he is seeking authority for independent bank examination and the authority to determine products eligible for deposit insurance. “This will help mitigate moral hazard which may be caused by increased coverage,” he added.
Anticipating fears of local bankers that his proposal would lead to over-regulation, Nograles assured that this will not happen. He explained, “This will instead result in a responsive regulation that will help PDIC manage risks and ensure better depositor protection.”
In his presentation before the session on International Financial Literacy Initiatives, Nograles highlighted PDIC’s current project to upgrade awareness and understanding of the financial sphere. Tagged as the PDIC Financial Literacy Project for Students, it is the first curriculum-based financial literacy project in the Philippines. Its conception resulted from the identification of risk-taking and regulatory gaps as the primary causes of the present economic crisis. Nograles said that financial literacy education and bank regulation “must complement each other” in addressing these issues.
Bair, meanwhile, stressed during the conference that there is a need for “smarter regulation.” She further defined this as “striking a balance between regulation and innovation. Even with regulation, it will still allow market forces to operate.”