Monetary authorities will pursue “progressive and proactive prudential reforms” to maintain the country’s resilience against external shocks, the chief of the Bangko Sentral ng Pilipinas (BSP) said.
“With the evolving trends and changing preferences in financial services delivery, we continue to align with international standards while engaging relevant stakeholders for our policies to remain responsive to local conditions,” BSP Governor Nestor Espenilla Jr. told financial industry executives last week.
Reiterating his “continuity plus plus” agenda, Espenilla said the BSP would keep focusing on its core mandates while pushing ‘”the envelope further” with regard to reforms.
“These financial sector and market infrastructure reforms are strategic, complementary and reinforcing. They aim to deepen our local currency debt and foreign exchange markets, digitalize our payment system and ultimately enhance access to financial services and products,” he said.
The Bangko Sentral chief noted that capital markets would play a major role given the national government’s infrastructure ambitions, adding that a “well-functioning” local currency debt market would be “critical to the implementation of a sustainable market-oriented debt management strategy”.
This will support the central bank’s open market operations, he said, and financial stability will also be boosted via diversified funding sources and financial products.
“Even as we pursue efforts to deepen the local debt market, the BSP actively worked on improving access to investment products,” Espenilla noted, citing last year’s launch of the Personal Equity Retirement Account program.
The central bank will also pursue legislative approval of the proposed Collective Investment Schemes Law, which is expected to provide a legal framework for pooled investment vehicles.
“Given the Philippines’ young demographic profile, these efforts can also translate to the mobilization of a sizeable and sustainable amount of savings towards financing the country’s long-term infrastructure requirements and developmental programs,” Espenilla said.
Monetary authorities will also pursue ambitious foreign exchange (FX) reforms that will deepen the forex market and reduce the cost of doing business.
These include the scrapping of prior regulatory approvals for certain foreign exchange transactions, simplifying registration processes, further reducing documentary requirements and enhancing data capture.
“With these efforts, we hope to encourage FX flows from the parallel market to the formal market. Even as we strengthen regulations over money service businesses to maintain financial integrity and enhance consumer protection, we will streamline FX requirements for the banking system to reduce market fragmentation and increase FX liquidity,” he said.
Finally, Espenilla said monetary authorities were targeting digital innovations to reinforce the capital and foreign exchange markets and the financial inclusion agenda.
“In this regard, the BSP is committed to drive modernization of the country’s retail payment system, promote electronic retail payments, and facilitate inter-operability for faster settlement of transactions,” he said.
“The launch of the National Retail Payment System, in partnership with industry stakeholders, will help us achieve this vision of a ‘cash-lite’ economy,” Espenilla added.