The appointment of Budget Secretary Benjamin Diokno as governor of the Bangko Sentral ng Pilipinas (BSP) was a record of sorts.
It was the first time since the BSP was reorganized in 1993, pursuant to the New Central Bank Act, that somebody other than an “insider” or a banker was named to head it.
Three of Diokno’s predecessors—Gabriel Singson, Amando Tetangco Jr. and Nestor Espenilla Jr.—earned their spurs in the BSP, while Rafael Buenaventura was a former Citibank executive.
Aside from not being in the short list of possible appointees, Diokno is an economist and has no banking credentials to his name. In addition to these “shortcomings,” he is closely identified with the administration as a staunch proponent of the “Build, Build, Build” program.
To the administration’s critics, the latter element poses a potential threat to the independence of the BSP as the country’s monetary regulator.
There is no question the BSP had lived up to its mandate under the leadership of the earlier mentioned governors. These BSP insiders ably steered the country through the financial crises that arose during their tenure.
Indeed, a BSP insider or banker taking over the late Gov. Espenilla would be an advantage. He or she can immediately hit the ground running without need for prior briefing about the intricacies of the BSP and the domestic banking community.
But a BSP insider or banker does not have a monopoly of knowledge or expertise about the country’s monetary issues and how to address them in light of international financial or economic developments.
Sometimes, when somebody is too close to a problem or has been involved in it for so long, he or she fails to see that there may be other ways to solve it.
Diokno’s perceived lack of banking experience (which is not entirely correct because as an economist, he has to deal with banking issues too) may be viewed as a plus rather than a minus.
He represents a new perspective in attending to the country’s monetary problems, or an opportunity to think of solutions out of the box that the BSP has been used to for the past 20 years.
With his decades-long experience as the country’s budget manager (or the fiscal side of government), Diokno can provide significant inputs from a different angle to the Monetary Board.
To borrow a buzz word that today’s marketing managers are fond of using, Diokno may play the role of “disruptor” (or a person who prevents something, especially a system, process or event, from continuing as usual or as expected) in the BSP.
There is always room for new ideas in any organization, more so in one like the BSP that has adopted an insular attitude in the management of its affairs.
The principal challenge Diokno faces in taking over the BSP’s helm has nothing to do with his competence. He has enough education, training and experience under his belt to ably handle, together with the Monetary Board, the country’s monetary issues.
Instead, it’s establishing and maintaining his credibility to the public and the international financial community. He has to overcome the apprehension expressed by some quarters, which includes foreign financial analysts, that he would be less independent or be inclined to toe the administration line in shaping the BSP’s monetary policies.
If he recommends measures that appear to be supportive of the position of the government’s economic managers (his former colleagues), he may be criticized as subservient to the administration.
If he takes issue with the economic managers’ actions that seem to counter the BSP’s, he may be accused of grandstanding or simply making a show of his independence.
Diokno may find himself in “damned if you do, damned if you don’t” situations as he steers the country’s monetary course in the coming years.
From the looks of it, a tough job ahead awaits Diokno as BSP governor.