Pandemic-induced financial market distortions temporary

The Philippine financial system remains strong and any damage that the coronavirus pandemic has inflicted on it is temporary, according to the head of the country’s central bank, who noted regulators were closely monitoring the environment to guard against risky behavior whether by banks, corporations or small clients.

Speaking on behalf of the Financial Stability Coordination Council, Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno nonetheless said that the COVID-19 crisis was different from previous upheavals “because it is a direct shock to the real economy, to supply chains and to the welfare of families and individuals.”

He assured the public, however, that based on the interagency group’s reading of market indicators and its surveillance of what was happening on the ground, it did “not see any indications as of yet that our financial market has been impaired irreparably.”

“Ultimately, the goal is to ensure that our financial system works for us and facilitates in improving the welfare of individuals, from savers to borrowers, to investors and issuers, to intermediaries, to infrastructure operators and digital service providers,” Diokno said. “We are also committed to the value proposition of finance and to making the financial system increasingly resilient to different forms of shocks.”

On Tuesday, the council— which is composed of the BSP, the Department of Finance, the Insurance Commission, Philippine Deposit Insurance Corp. and the Securities and Exchange Commission—released its framework on its use of macroprudential policies to manage systemic risks in the financial system. INQ