benjamin e diokno : bangko sentral ng research fair “ central banking in the time of pandemic ” keynote speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the bsp research fair “ central banking in the time of pandemic ”, organized by the bsp research academy, virtual, 12 july 2021. * * * good morning to our speakers and participants. thank you for gracing this milestone event for the bsp, a timely testimonial of the bsp ’ s support for robust and evidence - based research, especially as we celebrate 72 years of central banking in the philippines, and 28 years as the bangko sentral ng pilipinas. this research fair represents many firsts for the bsp : it is our first international research fair organized by the recently established bsp research academy. as you know, we have a main conference for day 1 and a less formal research cafe for day 2, co - hosted with the seacen centre. it is also the first completely virtual international conference organized by the bsp, where various researchers from local and international institutions are presenting their papers. this is also the first international conference of this nature we have organized since the onset of the pandemic. this year ’ s theme, “ central banking in the time of pandemic ” is the most pressing issue facing central banks today. the repercussions of the covid - 19 pandemic are unprecedented in our global economic history, even when compared to the spanish flu of 1918 — the most devastating pandemic of all time in terms of the number of deaths. this is also because the covid - 19 pandemic has, in effect, caused a trio of shocks — a supply shock, a demand shock, and a shock to financial systems, as well. the covid - 19 pandemic is the first epidemic in the world ’ s history that has caused significant damage not only to people, the health sector and the macroeconomy, but also posed a considerable potential threat to the stability of financial sectors. financial market reaction to the uncertainty and risks during the acute stages of the covid - 19 outbreak have led to significant strains in global financial markets. in the first quarter of 2020, there were sharp downfalls in the equity markets in advanced economies, as well as in emerging market economies. the speedy and substantial

monetary and fiscal responses of policymakers have prevented a liquidity crisis, which would have had dire and pervasive economic and financial stability implications. specifically, central banks reacted rapidly to market turmoil starting in march 2020 by adopting a wide - ranging set of emergency liquidity facilities and engaging in long - term government asset purchases. while monetary policy only plays a complementary role, it is a critical one. the bsp was among the central banks to be the first to respond to the crisis through the enactment of liquidity - enhancing measures. in fact, our policy rate cuts have amounted to a total of 200 basis points since march 2020. 1 / 4 bis central bankers'speeches bsp ’ s accommodative monetary policies were aimed at alleviating any expected tightness in liquidity conditions, uplift business and consumer confidence, and help maintain the orderly functioning of the philippine financial system. we also implemented some extraordinary measures including provisional advances to the national government ( ng ) and the purchase of government securities in the secondary market. on the regulatory front, we implemented time - specific and well - targeted regulatory and operational relief measures to encourage bsp - supervised financial institutions to continue supporting the domestic economy. specifically, the bsp reduced the reserve requirement rate and provided for alternative reserve compliance for lending to micro - and small and medium enterprises or msmes. we treated loans to msmes as compliance to the reserve requirement, increased the single borrower ’ s limit, and raised the ceiling for real - estate loans. we also allowed a grace period for loan settlement and restructuring of rediscounted loans. such moves provided relief to banks and their borrowers. imf chief economist gita gopinath, at the 3rd apec structural reform ministerial meeting last june 16, 2021, in fact commended the philippines as among the asean - 6 economies which effectively provided liquidity support to firms, including through loan moratoria and government guarantees. these various policies, she continued, have “ … helped preserve future living standards, and benefit disproportionately lower - skilled workers and smes that would have been worse off otherwise. ” just as the bsp acted quickly to mitigate the economic and financial impact of the pandemic, and we are now carefully assessing the appropriate timing for the transitioning from our accommodative stance. we realize that doing this too late or too early could have serious repercussions on the economy. success on the public health front combined with