MANILA, Philippines - Fund managers and bankers cheered the re-appointment of Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. by President Aquino to another fresh six-year term when his first term expires in July.
American banking giant Citi economist Jun Trinidad said markets and the business community would find comfort in Tetangco’s experience and familiarity with central bank after rising from the ranks to the top position since 1974.
“Tetangco’s track record over the past six years highlighted by his excellent stewardship of BSP and monetary policy, as well as favorable economic management during the global crisis years recently, capped by a country rating upgrade, was not lost to Aquino and his economics team,” Trinidad said.
He pointed out that Tetangco’s reappointment would ensure policy continuity as the economy and the markets are expected to face new challenges over the medium term.
He added that the reappointment of the outgoing central bank governor to another six-year term starting July shielded the BSP from political intrigues.
“Mr. Aquino’s reappointment of Governor Tetangco sends the strong message that BSP and monetary policy would be spared partisan politics,” Trinidad stressed.
According to him, the BSP governor did not take sides during the politically volatile term of former President Arroyo but instead focused on monetary and inflation objectives helping strengthen credibility of the central bank.
For his part, Dutch-owned ING chief economist for Asia Tim Condon said Tetangco deserves to be recognized as the best central banker in the world after successfully showing that there is an alternative for dealing with “hot money” instead of heavy intervention in the foreign exchange and sterilization in the money market practiced in most of Asia.
“The BSP demonstrated last November that there’s a better way to run macro policy… with less intervention in the foreign exchange market. With short-term interest rates not hostage to an exchange rate target, the effectiveness of the central bank’s policy interest rate for controlling inflation would increase,” Condon said.
While some of its counterparts risk resorting to capital controls to defend their exchange rates from “hot money” inflows, Condon said the BSP took a new tack: it did not roll over some of its maturing foreign-exchange currency swaps.
The move, he explained, resulting in the injection of money market liquidity pulled short-term interest rates lower, which halted the peso appreciation pressure.
Philippine Deposit Insurance Corp. president Jose Nograles likewise welcomed the reappointment of Tetangco to a second term saying the move bodes well for the country’s banking system.
“This will provide continuity and stability in the management of the country’s banking and financial system,” Nograles told reporters Friday evening.
The 600-strong Rural Bankers Association of the Philippines vowed to work closely with the reappointed BSP governor.
“We are pledging our banking sectors’ full support. We will continue to work with Mr. Tetangco and the BSP to sustain financial stability and ensure the continuous growth of our economy in the countryside,” RBAP executive director Vince Mendoza said.
Tetangco took up AB Economics at the Ateneo de Manila University where he graduated cum laude. He took up graduate courses in business administration in the same institution. As a central bank scholar, he took up his MA in Public Policy and Administration (concentration in Development Economics) at the University of Wisconsin in Madison, USA.
He assumed office as BSP governor in July 2005 after occupying different positions in the organization in a span of over three decades. He served as Deputy Governor in-charge of the Banking Services Sector, Economic Research and Treasury.
As BSP chief, Tetangco is also the Chairman of the Monetary Board, Anti-Money Laundering Council and Philippine International Convention Center; vice-chairman of the Agriculture Credit Policy Council; member of the Capital Market Development Council, Export Development Council, PhilExport Board of Trustees, Philippine Export-Import Credit Agency; and director of PDIC, National Development Council, and National Home Mortgage Finance Corp.