Monetary, fiscal authorities vow timely intervention

MANILA, Philippines — Monetary and fiscal authorities vowed swift and timely action amid the extraordinarily volatile markets due to external and domestic headwinds that continue to affect the Philippines.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the Financial Stability Coordination Council (FSCC) continues to assess potential risks to the stability of the local financial system.

Espenilla, who is also chairman of FSCC, said it recognizes the increased volatility in macro-financial markets where interest rates have generally become more volatile, investors have rebalanced toward safe haven currencies, and threats to global economic growth have increased.

“Financial markets are extraordinarily volatile this year and the FSCC continues to assess the possible impact to the Philippines of changing macro-financial conditions,” he said.

To sustain the growth of the economy and in support of the infrastructure development initiatives of the government, the FSCC is considering various proposals to strengthen long-term finance, enhance valuation practices for market instruments, as well as broadening its communication initiatives.

“The challenge is to intervene early enough so that systemic risks do not build up, but not too early that they derail our own growth momentum. We continue to be cognizant of this delicate balance, nurturing innovations and ideas while providing appropriate prudential oversight,” Espenilla said.

The FSCC executive committee is composed of principals and most senior officers of the BSP, the Department of Finance, the Bureau of the Treasury, the Insurance Commission, the Philippine Deposit Insurance Corp., as well as the Securities and Exchange Commission.

Different jurisdictions have different definitions for financial stability, but all of them share the common feature that a well-functioning financial system is essential to the achievement of financial stability.

The focus of the FSCC is consistent with this broad view as it considers various cross-cutting issues that may impact on the Philippines financial market.