Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. reiterated on Tuesday the next central bank chief must be an insider and possess three major competencies to ensure a seamless change in BSP leadership.
“If you want a seamless transition in the BSP, the next governor should be one with central banking experience, an insider,” Tetangco replied when asked if he prefers an BSP insider or outsider as the next governor during a panel discussion on the sidelines of Chamber of Thrift Banks (CTB) 2017 Convention in Makati City.
Tetangco also enumerated three competencies a central bank governor must possess, with a good understanding of the job a major requirement.
“That’s basic. As head of the BSP, you have to be familiar with primary objectives which would be maintenance of price and financial stability conducive to a balanced and sustainable growth of the economy. One should also know how to try and achieve that given the challenges in the operating environment,” he said.
The BSP governor said the above-mentioned quality would require experience, stressing that being knowledgeable in economics, monetary theory, as well as banking regulations would be very useful.
“But these will have to be contextualized in terms of what the BSP is really supposed to do – that’s one major requirement: a clear appreciation of the mandate and how to deliver on the mandate” he said.
Secondly, he said the BSP chief should have patience amid many challenges.
“Sometimes, the results that you are looking for cannot be achieved quickly. But you have to keep on trying. If you really believe that these are the reforms that are needed, then you have to pursue and persevere,” he said.
Tetangco said it is important to be able to work with other government agencies, because the BSP is just one of the three to four regulators in the financial services industry besides the Securities and Exchange Commission, Insurance Commission, and Philippine Deposit Insurance Corp.
“A number of the reforms that are required will need support of these agencies, because there are some overlapping areas across different types of financial institutions, as well as non-financial or fund management functions. That is important, to be able to work with them,” he said.
A BSP governor must know how to work with the organization, Tetangco noted, saying the BSP is ready for leadership change because it is a solid institution, with committed employees and highly trained people.
“The next BSP governor should know how to work with the organization that is there right now,” he said.
“If you look at those competencies, an underlying factor there would be familiarity with the mandate and how to deliver on it, as well as the culture of the organization. Only someone with central banking experience would have that,” he added.
Asked about what reforms are left to be done at the BSP, Tetangco said elements certain components of the Basel 3 reform agenda need to be put in place.
“There are still other components that still need to be implemented. Aside from that, we need to continue to sharpen the surveillance tools of the BSP. There’s a lot of integration going on in the global and regional economy, and because of this integration, you’ve got developments in other jurisdictions directly or indirectly affecting developments in our jurisdiction,” he said.
These developments must be assessed and monitored in terms of their potential impact on local conditions and see if there’s a need for policy action to address potential repercussions on the economy, according to the outgoing BSP governor, whose term ends on July 2.
“Surveillance tools need to be further sharpened. We’ve been doing this for the past several years, we’ve set in place a number of early warning systems, indices to make sure we are able to capture the potential impact of external as well as local developments,” he added.