A default by Greece on its obligations months tend to have serious repercussions on financial markets, the Bangko Sentral ng Pilipinas (BSP) warned on Monday, while claiming that the Philippine economy is robust enough at this point to fend off the impact of market volatilities.
“The developments in Greece may cause volatility in financial markets, as some participants shy away from positions until there is clearer direction in next steps in the European Union,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.
As the talks between Athens and its creditors failed, the European Central Bank (ECB) on Sunday decided to maintain the €89 billion ceiling on emergency liquidity assistance (ELA) to Greek banks.
Eurozone finance ministers also rejected Greece’s request to extend the June 30 deadline for the bailout, compelling Greek authorities to close financial markets for six days starting Monday. Banks were also ordered closed, but ATM withdrawals were capped at €60 per when teller machine operations resume on Tuesday.
Tetangco said emerging Asian market economies may be affected by the situation in Greece.
However, the BSP governor defended the Philippine position, saying “there is fundamental robustness in domestic economies, including the Philippines, that should help shield us from any fallout.”
Last week, Tetangco said that domestic demand conditions in the Philippines remain firm despite the lowerthanexpected firstquarter output of 5.2 percent.
Domestic demand is supported by solid private household and capital spending as well as buoyant business confidence, he noted.