Volatility makes PH investors risk averse

Local investors have shifted their funds to more conservative assets due to higher volatility in interest rates as well as rising threats to the growth of the global economy, according to a group composed of the heads of government financial agencies.

The Financial Stability Coordination Council (FSCC) also said that it examined various proposals to “strengthen long-term finance, enhance valuation practices for market instruments, as well as broaden its communication initiatives”—all aimed at sustaining the growth of the economy

Its executive committee is made up of the principals and the most senior officers from the Bangko Sentral ng Pilipinas, the Department of Finance, the Bureau of the Treasury, the Insurance Commission, Philippine Deposit Insurance Corp. and the Securities and Exchange Commission.

“Financial markets are extraordinarily volatile this year and the FSCC continues to assess the possible impact on the Philippines of changing macro-financial conditions,” according to FSCC chair and BSP Governor Nestor Espenilla Jr.

The FSCC issued the statement after its quarterly meeting on Tuesday to assess potential risks to the stability of the local financial system.

Espenilla said the challenge facing policymakers “is to intervene early enough” so that systemic risks do not build up “but not too early that they derail [the country’s] growth momentum.”

“We continue to be cognizant of this delicate balance, nurturing innovations and ideas while providing appropriate prudential oversight,” he said.

The FSCC communique noted that different jurisdictions have different definitions for financial stability, but all of them share the common feature that a well-functioning financial system is essential to the achievement of financial stability.