Philippine banks remain adequately capitalized with enough liquidity buffers, but need to strengthen surveillance and early warning systems to ensure stability amid shifting global and local market risk, the central bank-led inter-agency Financial Stability Coordination Council (FSCC) said.
On Monday, FSCC chair and Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. said one of the topics discussed during the council’s recent quarterly meeting was the strengthening of its forward-looking surveillance, known as the Survey of Salient Risks.
The survey was designed to capture risk faced and vulnerabilities by the financial system in the near term, such as market volatility, policy uncertainty, geopolitical risk and technological disruptions.
The FSCC said it has been assessing and reviewing these sorts of risk for some time now, and how to effectively deal with each threat as they come.
As an assurance to the sector, Remolona said the FSCC “remains committed to inter-agency coordination, data-driven risk monitoring, and deploying needed measures to preserve market confidence and financial system stability.”
The FSCC includes the BSP, Department of Finance, Securities and Exchange Commission, Insurance Commission and the Philippine Deposit Insurance Corporation. The council coordinates efforts to monitor and manage systemic risks in the domestic financial system.
Besides increased risk monitoring, the FSCC continues to enhance policy initiatives including proposed reforms to the deposit insurance system.
It has ongoing monitoring of potential vulnerabilities due to global financial conditions, geopolitical tensions, and domestic liquidity shifts. These factors could impact asset valuations, debt servicing, market volatility, and trade, FSCC said.
The FSCC added that “it continues to refine its analytical tools to better oversee channels of systemic risks across sectors and timeframes, stressing the need for timely and adaptive policies in a fast-changing financial landscape.”
Among the issues the council closely monitors are inflation, price pressures and the government debt. The BSP on its own has also been improving its systemic risk management models, metrics, and policies to address possible systemic risks.
