Quantcast
Latest Stories

BSP urges reforms in charter to counter volatility

By

The central bank has once again called for reforms in its charter, saying monetary authorities need additional powers to counter the current and potential future volatility in the country’s financial markets.

In its report on economic developments released at the weekend, the Bangko Sentral ng Pilipinas (BSP) noted that capital flows, either going into or leaving the country, remained one of the major risks that the Philippines’ otherwise-strong economy faces in the coming months.

Last week, local share prices crashed and the peso hit its lowest point in over a year.

This came after the US Federal Reserve’s signal to end its aggressive monetary stimulus, alongside jitters over China’s economic slowdown, illustrating the country’s vulnerability to sudden external shocks.

Should the volatility markets continue, the BSP said it needs extra tools and resources to combat the effects of capital flows on inflation, share prices, foreign exchange and economic growth.

“Guarding against destabilizing financial market imbalances arising from capital inflow surges imposes a cost on the BSP,” the report read

Proposed amendments to the BSP charter, which needs congressional approval, include:

increasing the BSP’s authorized capital from P50 billion to a higher level commensurate with the expansion in the size of the economy and the financial system;

setting up of a formal arrangement on the sharing of gains and losses by the national government and the BSP;

restoring the BSP’s ability to issue its own debt securities to enable it to siphon excess money supply from circulation;

allowing the BSP to set up reserves to absorb losses from foreign exchange fluctuations; and

granting of tax exemption to the BSP.

Foreign capital, mostly in the form of foreign portfolio investments or “hot money,” has been entering the emerging markets like the Philippines since last year amid the weakness in developed economies.

“Against this backdrop, the BSP stands ready to employ, from its menu of policy instruments, measures that will help ensure that the benefits of capital flows are maximized while warding off the potential destabilizing impact of volatile capital flows on price and financial stability,” the BSP report read.

So far this year, the BSP has kept its key overnight borrowing and lending rates at record lows of 3.5 percent and 5.5 percent, respectively.

Rates for special deposit accounts (SDAs) have also been slashed to 2.5 percent across all tenors, as well as restricted the access of retail depositors to the BSP facility.

“The reduction in the SDA rates is consistent with the BSP’s efforts to fine-tune the operations of its monetary policy tools to enhance their effectiveness in promoting price and financial stability,” the BSP said.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Bangko Sentral ng Pilipinas , Banking , Business , News , US Federal Reserve

  • eight_log

    Ano ang gusto ninyo ngayon??? BOTTOMLESS SOURCE OF FUNDING TO BUY $$$$$$$$$$$$$????? HUWAG NA NINYONG LOKOHIN ANG TAONG BAYAN NA KUNG WARI AY MAY GINAGAWA KAYO … SA TOTOO LANG HINDI NGA NINYO MABANTAYAN ANG MGA BANGKO NA IILAN LANG YAN!!!!!! SIGURO ANG PAGBABANTAY NINYO AY PARA SUMALAKAY AT KUMITA!!!!!!!

  • erine0

    Charter reforms are long overdue. The 1987 Charter was appalling to start with. But count on PNoy to oppose any charter change because, like CARP and the horrific power situation, it is a legacy of his mother.



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • Ukraine FM: We are ready to fight Russia
  • Slain officer’s ‘diagram’ rocks PNP
  • 2 contractors fined P25,000 for delays in Edsa rehab
  • Luisita beneficiaries take over renters
  • 5 years of hard work pay off for top UP grad
  • Sports

  • Sharapova advances to Stuttgart quarterfinals
  • Galedo caps ride of redemption
  • Beermen, Express dispute second semis slot today
  • Lady Agilas upset Lady Bulldogs in four sets
  • NLEX roars to 7th D-League win
  • Lifestyle

  • A brand for life
  • Wear a rainbow on your wrist
  • Wearing Kate Moss
  • Sail into summer
  • Life lessons from the Ultimate Warrior
  • Entertainment

  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • OMB exec’s assurance: We work 24/7
  • Business

  • Gaming stocks gain, PSEi eases on profit-taking
  • Cebu Pacific flew 3.74M passengers as of March
  • Corporate bonds sweeteners
  • Professionals in the family business
  • Foreign funds flowed out in Q1, says BSP
  • Technology

  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Opinion

  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • A graduation story
  • Global Nation

  • Afghan hospital guard kills 3 American doctors
  • Career diplomat is new PH consul general in Los Angeles
  • US4GG: Aquino should ask Obama for TPS approval, drone technology
  • Complex health care system for California’s elderly and poor explained
  • Tiff with HK over Luneta hostage fiasco finally over
  • Marketplace