BSP eager to boost regional securities trading

The Bangko Sentral ng Pilipinas is keen on helping realize the plan to allow cross-border trading of securities within Southeast Asia, saying it is one way to help the Philippines and its neighbors achieve inclusive economic growth—that is, one that redounds to poverty reduction.

BSP Deputy Governor Diwa Guinigundo said central banks in Southeast Asia agree on the need to have deeper and more vibrant capital markets, as these would help achieve the goal of allowing the benefits of economic growth trickle down to the grassroots.

Guinigundo said that by allowing investors to easily buy and sell securities from any country within the region, capital markets of Southeast Asian countries will become more liquid and, therefore, able to provide more resources to finance investments and developmental projects. Consequently, he said, economic growth rates in the region would accelerate.

Economists said that one way to help reduce poverty in the Philippines is to accelerate its growth rate, which has averaged at just close to 5 percent over the past decade. They said the Philippines needs to grow by 7 percent every year over the medium term for growth to trim poverty incidence.

Guinigundo said accelerating growth, meantime, requires a significant increase in investments, which in turn needs the support of more financing. He said increased trading volumes in the capital markets will help increase funding resources.

“A deep and developed capital market can address the issue of currency and maturity mismatch and afford investors a longer time horizon, and in the process support more economic activities,” Guinigundo added.

The BSP official said central bank officials from countries belonging to the Association of Southeast Asian Nations last week agreed to pursue the plan of integrating by 2015 their financial systems, such as by easing rules on portfolio investments to allow more cross-border trading of securities.

The agreement came as emerging Asian countries are urged to implement measures that will make their economic growth “inclusive.”

The Asian Development Bank, during the 45th annual meeting of its board of governors held in Manila, stressed that while Asian countries have consistently posted decent economic growth rates over the years, several of them, including the Philippines, are not able to translate economic growth into lower poverty incidences.