benjamin e diokno : opening remarks - tuesday club press event opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the tuesday club press event, 4 january 2021. * * * good morning, officers and members of the tuesday club! it has become a tradition for us at the bangko sentral ng pilipinas to spend our first tuesday of the year with you. 2020 was an extraordinary year because of the covid - 19 pandemic which, by the way, is more than a health crisis, as the country also felt its debilitating impact on lives, livelihoods, and inequality. but this once - in - a - lifetime crisis, it is unlike other crises we have faced in the past. previous economic crises in the philippines had always been accompanied by rising interest rates and a weakening peso. the central bank of the philippines — the bsp ’ s predecessor — deliberately raised interest rates to contain peso depreciation and control inflation. but it was different this time for two main reasons. first, the philippines was in a position of strength when the pandemic hit us. the philippines ’ s strong macroeconomic fundamentals prior to the pandemic — manageable inflation, a strong and resilient banking system, a prudent fiscal position, and a hefty level of gross international reserves — cushioned the economy from the impact of the crisis. second, the bsp was among the central banks in the world that immediately responded to the crisis by deploying a set of comprehensive measures. the monetary board cut the policy rate by 200 basis points and the reserve requirement by another 200 basis points. as a result of this bold, timely, and decisive action, the country ’ s interest rates hit a historic low. to calm the market and inject liquidity into the system, we also adopted a wide range of measures that deployed almost two trillion pesos, equivalent to about 10 percent of the 2019 gdp. the peso appreciated by approximately 5. 67 percent — from p50. 74 to the us dollar as of end 2019 to its current rate at p48. 021. as of end november 2020, the country ’ s gross international reserves, or gir, hit an all - time high of us $ 105 billion, which is three times the import requirements of the country. in addition, the peso was supported

must also ensure that there is just enough money in circulation to meet the requirements of the country. the amount of money in circulation must not be too low that it could lead to higher interest rates and slower economic growth. on the other hand, money supply must not be too high that it will be inflationary and reduce the purchasing power of the peso. this is a complex and challenging balancing act. as mentioned before, it is imperative that the banking sector remains sound and healthy as it provides the funding requirements of the economy, using essentially money entrusted to it by the people. in fact, funding for more than 70 % of the resources of the banking system come from deposits which, as of june 2006, had reached p3. 2 trillion. ensuring the stability of our payments and settlements system is equally important. as the bank of banks, the bangko sentral serves as an effective clearing house for high value inter - bank transactions as it holds cash balances of the banks. for this purpose, the bangko sentral operates a real - time gross settlement system which we call the philippine payments and settlements system or philpass which processes about 2, 000 transactions with a total value of about 300 billion pesos …. daily. this is therefore a vital service as it minimizes settlement risks for high value transactions that may adversely affect the stability of the financial system. i hope that you will continue to support bangko sentral's policies and programs ; in the same manner, you can depend on our support …. if there is convergence on what our respective institutions want to accomplish. indeed, with appropriate programs of cooperation and complementation, the government and the private sectors can unleash the synergy which could sustain growth and development of our economy ; jobs and income for the man on the street ; as well as peace and prosperity for our country. let us therefore work together to sustain our growth momentum and continue to implement our reform agenda. remember, in the face of increasing global competition and millions of filipinos who remain mired in poverty, we either innovate …. or stagnate. let us choose to innovate … together. maraming salamat sa inyong lahat.