Market remains fluid — BSP chief
We are definitely better off today than a year ago. However, the ongoing recovery from old risks can generate a new set of potential risks
Local market conditions remain fluid amid current developments such as the supply-side driven rise in inflation, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
BSP’s chief underscored the importance of vigilance and pre-emptive actions against the backdrop of uneven pace of recovery across jurisdictions.
“We are definitely better off today than a year ago. However, the ongoing recovery from old risks can generate a new set of potential risks. We need to continuously track these potential risks and act when warranted,” Diokno said in a virtual press conference on Wednesday.
“Many aspects of the future remain uncertain and with uncertainty, risk aversion in financial markets may not be too far behind,” he added.
The Financial Stability Report (FSR) released by the Financial Stability Coordination Council (FSCC) showed that such disparity in recovery among countries pose additional risks to smaller economies like the Philippines.
“We make a conscious effort to look at industry-level issues as part of the effort to reduce uncertainties. We will look at other industries but these three are important to our recovery and our future,” he explained.
Assessments help
Finance Secretary Carlos Dominguez III shared the same sentiment as he noted that regular systemic risk assessments will allow the government to quickly address the underlying vulnerabilities and anticipate potential threats from the pandemic.
“Having a better understanding and view of brewing risks is necessary for calibrated actions and policy interventions. This is the way modern governments should operate,” Dominguez said during the same briefing.
“We should anticipate threats rather than merely react to problems after they have broken out,” he added.
According to him, the health crisis has placed the country’s financial stability under great stress — which was cushioned by the Duterte administration’s tax and economic policy reforms.
“Rest assured, we are doing our utmost to safeguard the health of our financial system to enable it to continue serving the needs of the public and support our ongoing recovery efforts,” the Finance chief said.
“We will always be vigilant against the risks posed by the pandemic while taking advantage of opportunities that will help restore the economic growth trajectory,” he added.
The FSCC aims to reduce uncertainties and pinpoint underlying vulnerabilities in the financial system through its semestral assessments contained in its FSR.