MANILA - The Bangko Sentral ng Pilipinas said Wednesday it is assessing the "systemic risks" to the country's financial system as a result of the global recession.
The BSP said its board-level Financial Stability Policy Committee (FSPC) met again to assess these risks, as well as identify further interventions in line with the transition to the "New Economy."
“Systemic risks may seem like a high-level concept but it really just means that financial authorities are looking for any sign that the operations of the financial market may be impaired to the detriment of the general public,” BSP Governor Benjamin Diokno said.
The FSPC was created in line with the mandate of the BSP to promote financial stability as outlined under its revised charter, the central bank said.
The BSP cut interest rates to a record low this year to support the economy. It also reduced the reserve requirement ratio for banks by 200 basis points to 12 percent.
"The FSPC now wants to ensure that this liquidity is more actively mobilized, describing the circulation of liquidity in the financial market to be critical for the recovery and transition to the New Economy," the BSP said.
Aversion to financial risks has increased globally including the Philippines, Diokno said.
“But if we want to move forward, we need to pro-actively reduce the risk aversion so there is a more fundamentally-sound balance between risks and rewards,” he added.
The BSP said it was critical to strengthen risk valuation practices so that the pricing of bank credit is continuously aligned with spot yields in the securities market.
“The situation calls for everyone to pitch in, from exercising prudent health protocols to the financial authorities thinking out-of-the-box to address a once-in-a-lifetime shock,” Diokno said.
The BSP kept the benchmark overnight borrowing rate steady at 2.25 percent after 4 interest rate cuts this year.
Diokno, however, has said that further cuts in the reserve requirement were still on the table, and that the country still had "lots of bullets" in its arsenal in the fight against the pandemic.