NextGen Day

As he emphasized the effects of climate change on the economy, Governor of Bangko Sentral ng Pilipinas (BSP) Felipe Medalla stressed the significance of reevaluating the regulatory framework to stimulate increased lending towards climate change mitigation.

Medalla stated in his remarks at the BSP Sustainable Central Banking (SCB) Strategy’s launch on Thursday at the central bank’s main headquarters in Manila that climate change might affect the availability of food among other things, which has an impact on inflation.

Before this persists permanently, he claimed, the central bank must assist in preventing the occurrence of second-round effects or the subsequent impact of supply limits, among others.

In order to make sure that banks’ capitalization is proportionate to the risks they would face once they lend to susceptible industries or projects, he said, the regulatory framework review is required in this situation.

“We have to make some revisions on how we define credit risks, default risks, and all the financial risks,” Medalla said. “Even just from the point of view of our usual regulatory approach.”

“Climate change is a collective social effort, and the BSP, the central bank, could only do so much, but it will take the necessary actions. But because there is only so much that we can do, we need everyone’s help to put the sustainable central banking agenda into action. Of course, society outside of central banking must also make a contribution, he continued.

The 11-point SCB Strategy, according to BSP Deputy Governor Chuchi Fonacier, aims to provide a more sustainable future for the financial sector.

She added that the BSP pledges to be the model for regulated institutions, saying, “Besides being sound and stable, our objective is to have banks and financial institutions that are cognizant of the environment and the pressing concerns and threats of climate change to price and financial stability.”

According to her, the central bank “shall develop ecologically responsible and sustainable policies and work practices” as part of the SCB Strategy.

According to her, the BSP would include environmental, social, and governance (ESG) elements in its primary operations.

She continued, “The BSP’s duties as a facilitator, mobilizer, and doer in promoting sustainability throughout the financial system are embodied in the 11-point SCB Strategy.

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