benjamin e diokno : banking as a " going concern " in the time of pandemic speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the celebration of association of certified public accountants in public practice ’ s ( acpapp ), accountancy week, manila, 14 july 2020. * * * to the officers and members of the association of certified public accountants in public practice ( acpapp ), under the leadership of national president anita c. rodriguez, good afternoon. i hope everyone is staying healthy and safe throughout this time. i am pleased to join you today in celebration of acpapp ’ s accountancy week as you rise in solidarity, stand in the gap, and work as hard amidst this covid - 19 pandemic. for cpas in public practice, it is ensuring that the opinions expressed on financial statements are reflective of the true state of the business. the “ going concern ” assumption of cpas is being used by investors and the public in making important decisions. this principle assumes that during and beyond the next fiscal period, a reporting entity will complete its current plans, use its existing assets and continue to meet its financial obligations. simply put, there is no doubt that business entity will go on, and if i may say it casually, exist indefinitely. the covid - 19 pandemic is posing threats to economies and financial systems around the world, including the philippines. this challenge the principle of “ going concern ” in several businesses across different industries. but we are confident that the banking system will emerge from this crisis standing strong. this is all because of the reforms implemented over the years reflecting the lessons learned in the 1997 asian financial crisis. today, i will talk about the state of health of the philippine banking system amid the crisis. next, i will discuss the extraordinary measures that the bsp has implemented to ensure the liquidity of the system and the continuous flow of credit to the economy to support households and firms — including the micro, small, and medium scale enterprises. i will then talk about the developments on the use of digital platforms, and how digital payments have surged as a consequence of the pandemic. i will then discuss the potential risks in the financial system. in the concluding section, i will then leave you iwth some takeways. the philippine banking system is in a strong financial position going into the crisis. the

, especially with the prospect of lower global growth? from indications, there may be no need at this time for economic stimulus from monetary policy. the government has fiscal space. as they did in q2, government should step up spending on the vital infrastructure needed for economic growth to be sustainable. the forthcoming election spending, though a one - time shot in the arm, could also provide economic stimulus. what the bsp will do to help raise the growth trajectory – in addition to ensuring a low and stable inflation environment – is to further enhance banking sector policy to cement the strength of the banking system. the bsp will also continue to pursue market reform to help establish the financial market infrastructure for the efficient intermediation of funds between fund sources and users. neda projects that a more realistic economic growth rate for 2015 is 6 – 6. 5 pct. it is comforting that even at these levels, the philippines would likely still be among the fastest growing economies in the region. conclusion ladies and gentlemen, i ’ ve covered a lot of ground this afternoon. let me summarize by saying : the bsp is watchful of domestic and external conditions. and, we are ready to take the appropriate policy actions, as and when needed, to minimize the potential adverse impact of risks to the economy. in the pursuit of creating growth opportunities for the economy, the bsp continues to look to the whole market ’ s continued support. i know market players live for volatility. it is what gets your juices going. but let me just provide some words of advice : these are not your typical “ vols. ” there is not necessarily any historical price action that you could confidently go back to, to calculate your vars. therefore, be very careful of any new products and markets that you are looking to deal in. be sure you understand these well. have the necessary credit, market and operational risk mitigants in place. finally, this is not a bout of volatility that is likely to go away quickly. so, if you are in this game for the long haul, you need to temper animal spirits with a healthy dose of reflection and humility. i think i ’ ve said enough for now. let me end here. i wish you all well. thank you for your attention. bis central bankers ’ speeches