BSP at 22: Providing stability, sustainability for inclusive growth
Today, the Bangko Sentral ng Pilipinas marks its 22nd anniversary. It is two decades and two years old, having been created in 1993 by Republic Act No. 7653 known as the New Central Bank Act.
In pursuit of its mandate, the BSP focuses on what is called the three pillars of central banking: price stability, a sound and stable banking system, and a payments and settlement system that is safe, reliable and efficient.
How has it fared so far?
Successful inflation management
Well, price movements as measured by the headline inflation rate dipped from 2.2 percent in April to 1.6 percent in May, the lowest in 20 years. Inflation for the whole year of 2014 averaged 4.1 percent. This marks the sixth consecutive year that inflation remained within the official target range.
A sound, stable and liquid banking system
The Philippine banking system is sound, stable and liquid with a strong balance sheet and capitalization above national and international requirements. Loans continue to increase at double-digit levels and are directed mostly to productive sectors. Meanwhile, public confidence in the banking system continues to push deposits to record high levels.
Safe and reliable payments and settlement system
The BSP operates the Philippines’ real-time gross settlement system called PhilPass which is a vital part of the economic and financial infrastructure. Its efficient functioning allows transactions to be completed safely and on time, and thereby contributes to overall confidence in the financial system.
Improving lives through financial inclusion
Beyond the three pillars of central banking, the BSP is actively working on the development of an inclusive financial system that will support inclusive growth.
The objective of financial inclusion is to provide access to responsive, responsible and fair financial services that will empower Filipinos, particularly the marginalized sectors, to improve their quality of life.
The BSP continues to register gains in its initiatives on financial inclusion. In the process, it has received global rewards and citations.
This month, the Bangko Sentral ng Pilipinas received the Global Forum on Remittances and Development (GFRD) Public Sector Award for 2015 in recognition of its outstanding commitment, innovation and impact in promoting remittances for social and economic development through its Economic and Financial Learning Program (BSP-EFLP).
In this connection, BSP Governor Amando M. Tetangco Jr. cited overseas Filipinos and their beneficiaries for their continuing gains in developing good money habits such as saving and investing. “The BSP’s Consumer Expectation Survey in the second quarter this year indicated that there were more households that used part of their remittances for investments while allocation for sav- ings increased to 49.7 percent from only 7.2 percent in the first quarter in 2007,” Tetangco disclosed.
Furthermore, the Philippine regulatory framework for microfinance has been consistently ranked as one of the best in the world by the Economist Intelligence Unit (EIU). More recently, the EIU ranked the Philippines as the top country in Asia, and the 3rd in the world, with the most conducive environment for financial inclusion.
The EIU further notes that countries like the Philippines with a long tradition of microfinance have better institutional and financial infrastructures – which can be leveraged to financially include more clients at the “bottom of the pyramid.”
The BSP on its 22nd anniversary can claim to be successful in pursuing its mandate to provide price and banking stability that promote balanced and sustainable economic growth that generates jobs.
The BSP has also played a critical role in providing buffers against potential financial shocks with a strong external position that includes Gross International Reserves of over $80.6 billion as of end-May 2015. This remains ample as it can cover 10.6 months worth of imports of goods and payments of services and income. It is also equivalent to 4.9 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
In parallel, it continues to move forward in its financial inclusion initiatives that enhances the stability of the financial system, supports inclusive growth and provides opportunities for a better life for Filipinos across the country.