BSP pushes systemwide monitoring to avoid crisis
The Bangko Sentral ng Pilipinas (BSP) has underscored the need for an integrated, proactive and systemwide risk monitoring and management to avoid a financial crisis on a national scale.
BSP assistant governor Johnny Noe Ravalo said during the Financial Stability Seminar attended by mid-level and senior executives of the state-run Philippine Deposit Insurance Corp. (PDIC), financial transactions are becoming more and more interconnected and complex.
Ravalo said risks have evolved and magnified, and these developments, from a financial regulator’s perspective, require a transition from standalone to systemwide oversight.
Ravalo, who heads the BSP’s Office of Systemic Risk Management, said the application of macroprudential policy, ensures that the financial institutions are more resilient against systemic risks.
The concepts of financial stability and financial crisis highlighted the importance of interagency collaboration in coordinating efforts to monitor and mitigate systemic risks, spot vulnerabilities and strengthen regulatory oversight to prevent or limit the impact of a severe disruption in the financial system were also discussed in the seminar.
PDIC president Roberto Tan stressed the need for financial regulators to identify vulnerabilities in the environment and improve preparedness by instituting safeguards to prevent systemic deterioration and severe financial crisis in the country.
Member-agencies of the Financial Stability Coordination Council (FSCC) including the PDIC, BSP, Insurance Commission, Securities and Exchange Commission and the Department of Finance are required to hold a series of Financial Stability seminars.
The FSCC was created in 2014 to facilitate interagency cooperation in identifying, managing and mitigating the buildup of systemic risks in the financial system.