MANILA, Philippines —Former Finance Secretary Benjamin Diokno will return to the Bangko Sentral ng Pilipinas (BSP) to fill the last seat at the six-member Monetary Board (MB), the central bank’s highest policy-making body.
Diokno’s appointment to the powerful MB was announced by the Department of Budget and Management in a statement on Friday, as he turned over the finance portfolio to veteran lawmaker Ralph Recto.
The announcement confirmed rumors of Diokno’s comeback to the BSP, where he had previously served as governor from 2019 to 2022 and helped the economy navigate unprecedented challenges arising from the COVID-19 pandemic.
Biz Buzz earlier reported that Diokno had politely turned down an offer to become chair emeritus of newly created Maharlika Investment Corp. as he preferred the MB position.
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Before becoming a central banker, Diokno had worked as budget secretary for several administrations, the most recent being under the administration of former President Rodrigo Duterte.
But despite being previously appointed to the Department of Finance by President Marcos, Diokno did not entirely leave the BSP as he has represented the government sector at the MB. He has often been vocal about his views on central bank issues.
With this appointment, he has secured a full six-year term at the MB despite stepping down as finance secretary.
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Recto is widely expected to take over the MB seat reserved for the national government.
Dominated by economists
With this development, the six-member MB is now dominated by economists and former policymakers.
BSP Governor and MB Chair Eli Remolona Jr. is a former official of the US Federal Reserve and Bank for International Settlements. The other members of the current MB are Romeo Bernardo (economist and former finance undersecretary), Rosalia de Leon (fiscal policy expert and former national treasurer), Bruce Tolentino (economist and former agriculture undersecretary) and Anita Linda Aquino (former Citibanker and Philippine Deposit Insurance Corp. board member).
Victor Abola, economist at University of Asia and the Pacific, is not worried about underrepresentation of bankers at the MB.
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“The BSP does not need an ex-banker. Central banking is very different from commercial banking. CB-ing is much about managing the economy, which requires a different skills set than managing a bank,” Abola said.
“In other countries … most of monetary authority members are economists. Having an ex-banker may unwittingly put some influence by private banks on BSP,” he added.
For Leonardo Lanzona, economist at Ateneo De Manila University, having less or no banker at the MB may not entirely be a bad idea.
“The important task right now is to contain inflation, which means interest rates are still likely to be kept high. Diokno might [have been] placed there to push for a contrary view,” he said.
Diwa Guinigundo, analyst at GlobalSource Partners, agreed with Lanzona, adding that Marcos must make sure that MB should represent various areas of expertise and sectoral interests.
“That will be the challenge to the President to assure the civil society that appointments to MB are neither politicized nor personalized,” said Guinigundo, a former BSP deputy governor. —Ian Nicolas P. Cigaral