benjamin e diokno : welcome remarks - asia school of business online course for the financial stability coordination council welcome remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the asia school of business online course for the financial stability coordination council, 18 july 2021. * * * good morning to everyone and welcome to the first course structured by the asia school of business for the financial stability coordination council. i ’ m very pleased to welcome a dear friend of the bsp, former negara malaysia governor dr. zeti akhtar azis who now co - chairs the asb. let me also extend my warm greetings to mr. charles fine, president and dean of asb, dr. triw it ariyathugun, assistant professor of economics, dr. hans genberg, professor of economics and senior director of banking and finance program, and of course to my old friend who needs no introduction, dr. eli remolona, the director of central banking at asb. the financial stability coordination council has been actively looking at secondary market asset prices for signs about the market and their potential systemic risk concern. we have had active discussions about our yield curve and its incentive structure as market condition evolve, both in the philippines and in established offshore markets. as part of our intent to better survey risk behaviors, we have been exploring various opportunities for learning, to enhance the capacity of our fscc colleagues, and to address our mandate. the bar of accountability on that mandate has been raised, with the president signing executive order no. 144. with the legal authority to now issue guidelines and regulations related to managing systemic risks, it is important more than ever for the fscc to see what market players see, and for us to influence risk behaviors in ways that develop markets and build resilience. this is why this course is important, particularly at this critical time. we hear of the divergent paths of recovery from covid - 19 and how movements in advanced economies are affecting emerging economies and developing economies. no matter how you work on the analysis, this divergence should be evident in market prices, alongside portfolio flows and reflows. the global economy is patently interconnected through the pipeline of bond and credit markets. while economists are comfortable with comparative advantage on the trade side, risk behaviors in financial markets are much more fluid, and respond more quickly to changing incentives.

the philippine banks built in compliance with the bsp regulatory requirements and years of favorable banking conditions, proved to be useful. the banks ’ capital adequacy ratio of 16. 3 percent and 16. 7 percent on solo and consolidated bases, respectively, are well above the bsp ’ s and international standards. meanwhile, the rise in bad debt remains manageable. non - performing loans ( npl ) and nonperforming assets ( npa ) ratios were modest at 3. 1 percent and 2. 1 percent, respectively, as of end - 2020. these numbers compared well with the double - digit levels recorded during the asian financial crisis. given these indicators, the philippine economy has the essential elements to post a strong recovery this year. the robust structural characteristics and sustained policy discipline are the most effective tickets out of this pandemic. rest assured that the bsp stands ready to extend the same set of policy measures implemented in 2020 to support the economy, as needed. as this crisis is unprecedented, the measures we have implemented in 2020 were just as unprecedented. we are one with the government in our commitment to push forward measures to soften the impact of the covid - 19 pandemic on the economy and our fellow filipinos. as of january 12, 2021, the bsp ’ s policy and liquidity easing measures had injected close to 2 trillion pesos in liquidity into the financial system. this amount is equivalent to about 11 percent of the country ’ s 2020 nominal gdp level. moving forward, the bsp ’ s actions and policy thrusts will continue to be anchored on its core mandates of promoting price and financial stability. o n monetary policy : the bsp will remain vigilant over the current inflation dynamics and operating environment with a forward - looking perspective to ensure that the monetary policy stance continues to support economic recovery and address any risks to our price stability mandate. on the financial sector : the bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain responsive to emerging risks and to promote the continued soundness, stability, resilience, and inclusivity of the banking system, particularly through the pursuit of enhanced digitalization. third, on the external sector : the bsp will continue to adopt policies that will help strengthen the economy ’ s resilience to external shocks. these will include maintaining a market - determined exchange rate, sustain a comfortable level of reserves, and keep the country ’ s external debt manageable.