Amando M Tetangco, Jr: Steer toward true north
Speech by Mr Amando M Tetangco, Jr, Governor of Bangko Sentral ng Pilipinas (BSP, the
central bank of the Philippines), at the Awarding Ceremony for "MAP Management Man of the
Year 2015, Makati City, 24 November 2015.
* * *
They say receiving the MAP Management Man of the Year award is like winning Best Director
in the Oscars...
When I look at the roster of past winners... I guess they have a point ... But also, when I look
at the roster, Best Director for a particular film pales in comparison... Because everyone
before me had been judged for the consistency in his whole body of work...
that I address you this afternoon...
And so it is with pride and, at the same time, humility
Since I became BSP Governor in 2005, a frequently used idiom to describe my position is
that I am "at its helm." I find this analogy to an ocean-going vessel very appropriate, both from
the technical and from the operational-management side of central banking. Central banking
has, after all, often been described as a navigational act of directing... easing, tightening,
reining-in ... balancing.
Slight changes on the wheel can alter the ship's direction. Thus, captain and crew must be in
sync. With this in mind, for the last 10 years, 4 months and 20 days I have approached my
duties with great respect:
First, I must know the course with certainty. Many navigational tools can be consulted for
geographical direction. In my readings, I learned that the compass is limited. It often does not
point to "the true north" that does not change. Rather, it directs to a magnetic north that varies
because of fluctuations in the earth's fields. Thus, for accurate direction one must know where
the "true north" is.
For the BSP, our true north is spelled out in our mandates. We are committed to maintaining
price stability; a stable banking system; and a safe, sound and efficient payments and
settlements system. We choose the course that leads to them despite possible trade-offs or
even criticism, sometimes, lawsuits. In this commitment, we value our independence as we
cannot be carried by changing currents or tossed by the waves. Our direction determines our
destination.
Let me first talk about adherence to our second mandate.
Something about going through a crisis makes one think long and hard about the direction
one is taking. The traumatic 1997 Asian Foreign Exchange Crisis and then ten years later,
the 2007/8 Global Financial Crisis were valuable learning experiences that shaped our
thinking on how we should approach bank supervision and promote overall financial stability.
These defining moments have led us to embrace, champion, and implement wide-ranging
financial reforms.
The financial reform agenda is exceptionally challenging and complex... Significant progress
has been achieved but... more can still be done. It began with a long, painstaking, and painful
post-1997 crisis clean-up of the banking system. We followed through with decisive adoption
of relevant global banking reforms particularly those advocated by the Basel Committee and
other international standard setting bodies. Running parallel to this are the implementation of
regulations to raise the bar for the governance and risk management of banks, on one hand,
and the risk-based approach that we are now employing to supervise them, on the other.
Our goal was behavioral change in how banks are run. This, while consciously and
deliberately nurturing a more dynamic environment that encourages healthy competition,
financial innovation, consumer protection, and financial inclusion.
As a result, ladies and gentlemen, our banking system is robust. It supports expansionary
business activities and consumption spending, effectively becoming a truly reliable pillar of
economic growth.
Second, as captain, I must have an intimate understanding of the vessel and its equipment.
Our primary mandate, controlling inflation is often likened to operating a big ship. Slight
movements in the monetary policy rudder can cause big changes in economic course. We
must be focused, precise and deliberate in our decisions.
In 2002, the BSP adopted the inflation targeting framework. Inflation targetting or IT is an
exhaustive policy framework where thoughtful econometric modelling and forecasting,
grounded market surveillance, and sound judgement come together. And I am happy to report
that since we've become more adept at IT, we have also become more effective in keeping
prices low and stable. Economic growth is supported. Income equality is better promoted.
But the operating environment is evolving. So, again learning from the Global Financial Crisis,
the BSP enhanced its tool kit to include macroprudential measures to address, among others,
any unintended financial stresses... that could potentially arise from changes in market risk
perception... because of monetary policy actions or other related causes. Macroprudential
tools can be targetted towards areas for which traditional monetary policy tools are not
suitable.
Third, I must delegate to, and trust the ship's officers. In the book, True North by Bill George
and Peter Sims, there was insight that as one travels to the true north, a greater appreciation
for "the We" instead of "the I" is developed. A difficult journey is best undertaken with a capable
team. In this regard, I am fortunate that among my three deputy governors and myself, we
have clocked-in about 130 years of central banking experience. I wish to acknowledge them
this afternoon. Deputy Governor Nesting Espenilla of our Supervision and Examination
Sector, Deputy Governor Diwa Guinigundo of our Monetary Stability Sector, and Deputy
Governor Vic Aquino of our Resource Management Sector. I am grateful for the experience
and expertise of these men, and the excellent and dedicated officers of the BSP, past and
present, which combined through the years, illuminated a wider and brighter path for us to
charter.
I would also like to acknowledge another significant source of illumination: our highest policy
making body - the Monetary Board. I benefit much from the wisdom and technical knowledge
possessed and shared, always so selflessly, by the highly accomplished men that comprise
it. The Monetary Board is not involved in the day-to-day running of the "BSP Ship." To my
mind, the Monetary Board is like a lighthouse... guiding toward our true north... warning of
perilous areas, and marking safe entries to harbors. I wish to acknowledge the presence of
those who are here today. MBMs Cesar Purisima, Freddy Antonio, Philip Medalla, Andy
Suratos, Val Araneta and Jun de Zuniga.
The fourth duty of a captain is to take care of the crew. At present, the BSP has 5,321 officers
and staff across the country. While we have varied experiences and expertise, we are all
central bankers. We are taught and trained not just to do routine tasks. Rather, we live out
our shared mission and vision, which is to be a world-class monetary authority, and a catalyst
for a globally competitive economy that delivers a high quality of life for all Filipinos. We take
to heart, core values of integrity, patriotism, solidarity, excellence and dynamism. These
values are sustained by quality recruitment, training, succession and mentorship programs.
We are committed to capacity building. It is the skillful sailing by all crew members that
assures a successful voyage.
Fifth, I must provide clear and active communication internally, and lead coordination
externally. Internally, a strong knowledge management system and enterprise wide
communication policy are being implemented and continually refined in the bank.
We also give importance to and deeply value our domestic and international stakeholders and
partners. Last July, together with 12 other government agencies, we launched the National
Strategy for Financial Inclusion to build an inclusive financial system. We also chair the
voluntary inter-agency body, the Financial Sector Forum comprised of the BSP, SEC,
Insurance Commission and the PDIC.
Our Bank Supervision Policy Committee regularly conducts meetings with 15 industry
associations for the continuous rationalization of regulations and so that supervisory policy
remains relevant and responsive. Our Payment and Settlement Steering Committee regularly
consults PhilPaSS stakeholders who are given the opportunity to raise concerns, grievances,
as well as recommendations to improve PhilPaSS operations.
The BSP also actively participates and holds chairmanship positions in international fora such
as the Alliance for Financial Inclusion, the G-20 Global Partnership for Financial Inclusion,
Bank for International Settlements Asian Consultative Council, Financial Stability Board
Regional Consultative Group for Asia, and the BIS Meeting of Governors from Small Open
Economies.
As Governor, I represent the country in the Executive Meeting of East Asia and Pacific Central
Banks (EMEAP), ASEAN and ASEAN +3; and South East Asia Central Banks (SEACEN),
among others. We are represented in the IMF, the World Bank and ADB. We benefit from a
continued exchange of ideas, sharing of competencies, and strengthening of linkages.
Sixth, laws and regulations must be complied with. I understand that common carriers have
the legal duty to observe extraordinary diligence. In Philippine law, the banking community is
the only other industry required to observe this highest degree of diligence when acting in a
fiduciary capacity. And for good reason, given its key role. In the BSP, we are mindful of this
principle and strive to follow both the letter and the spirit of legal provisions.
Seventh, the journey must be inclusive. The BSP is continually increasing its interface with
the Filipino people, our ultimate stakeholder. The phrase "inclusive growth" is now cutting
across the global reform agenda. The BSP has been doing its part to promote financial
inclusion. And we have done so following three pillars, namely: access and usage, financial
literacy and education, and increased financial consumer protection. Policy and regulatory
efforts are designed and directed toward allowing more of our countrymen effective access to
a wide range of financial services, equipping them with know-how to appreciate which
financial service suits them best, and creating an environment where they are essentially
protected from unscrupulous elements.
We believe that for economic development and progress to be meaningful, more must
participate in and benefit from the journey.
Finally, a strong moral and internal compass is essential. It is difficult to find direction when
one relies only on external aids. Instead, one must listen closely to the dictates of his own
conscience - his true north - doing his best in each endeavor. In its simplest form, this is how
one genuinely moves forward: by listening to his inner compass, trusting in God, and doing
what, in his mind, is his very best, never settling for less in the day-to-day.
For me, as a young central bank statistician in the 1970s, this meant ensuring that each report
submitted to my supervisor was accurate and timely. All the numbers had to add up. In the
1980s, this entailed carefully preparing correct and complete documents for the next external
debt negotiation. It also required that as Director of the Research Department, my interviews
be faithful to our mandate. As Deputy Governor in the late 1990s and early 2000s, this
translated to basing each policy recommendation only on meticulous academic research
sensitive to market reactions.
As Governor, it demands attention to consistency and appropriateness of policies, and to
consider paramount, the BSP's mandate and public welfare.
In closing, I recap what for me, are the core responsibilities at the helm. There must be
commitment to the BSP's true north- its mandates. There must be expert familiarity with the
vessel and its equipment. Delegation to, and trust in the ship's officers is essential. The crew
must be cared for and continously prepared for the journey. Clear and active communication
must be provided internally, and there must be strong coordination externally. There must be
compliance with laws and regulations - to the standard of "extraordinary diligence". To be
meaningful, the journey must be inclusive. And most importantly, a strong moral and internal
compass is essential.
Today, I am humbled and honored that the Management Association of the Philippines (MAP)
has recognized that under my watch, the BSP has stayed steady on its course.
I am honored to join an illustrious roster of awardees that includes previous central bank
governors, from whom I have learned a lot. My predecessor, Governor Rafael Buenaventura
was Management Man of the Year in 2004; Governor Gabriel Singson in 1998; Governor Jose
Cuisia, Jr. in 2007; and Governor Jobo Fernandez in 1989. Another former CB Governor,
Jimmy Laya was once the President of MAP. For this award, and for consistently
demonstrating trust in the Central Bank and the role it plays, maraming salamat po sa MAP.
I cannot receive this honor without sharing it. With my wife, Elma; my children Patrick and
Miko, Eula and Mia, whose support and encouragement allowed me to seek out my own true
north even amidst trying times. I share this too with my grandchild Zara who gives us much
joy in the family. I pray that they would each continuously listen to their own internal and moral
compass.
With the men and women who with me, serve in the BSP with integrity, excellence and honor
- members of the Monetary Board, officers and staff, past and present, who have ensured
that the BSP stay its course, maraming salamat sa inyo.
Thank you all for listening. To the Management Association of the Philippines, it is with deep
gratitude and honor that I accept the award you have bestowed on me; my family; and
ultimately, on the magnificent team that comprises the Bangko Sentral ng Pilipinas.
Mabuhay at maraming salamat muli.