NextGen Day

MANILA – Governor Eli Remolona Jr. of the Bangko Sentral ng Pilipinas (BSP) emphasized the significance of continuous policy improvement in the banking sector and its positive impact, especially amidst the pandemic.

During the Philippine Economic Briefing held at the Philippine International Convention Center (PICC) in Pasay City on Tuesday, Governor Remolona delivered a recorded message for the post-State of the Nation Address (SONA) event. He praised the economy’s strong rebound from the pandemic, partly attributing it to the resilient banking system.

“In contrast to previous crises, our banks have played a crucial role in the solution rather than being part of the problem. This is partly a result of our efforts to ensure financial stability,” he stated.

Various improvements have contributed to the strengthening of the domestic banking system, including the increase in banks’ capitalization and changes in capital ratios.

To bolster economic activities and support domestic growth, the BSP permitted banks to lend to micro, small, and medium enterprises (MSMEs) as alternative compliance to reserve requirements during the pandemic.

While multiple measures are being implemented to revitalize the economy after the downturn, locally and globally, inflation has posed challenges for achieving rapid economic recovery.

“Thankfully, the BSP’s inflation-targeting framework has served us well amidst unusual supply shocks. We remain committed to ensuring price stability and have dedicated our resources and attention to achieve this goal,” Governor Remolona remarked.

He reiterated the monetary authorities’ forecast that the rate of price increases would continue to decelerate, returning to the government’s target band of 2 to 4 percent in the last quarter of the year.

“This range is what we believe is ideal for an economy like the Philippines when it operates at full capacity,” he added.

The inflation rate peaked earlier this year in January, reaching 8.7 percent, the highest in 14 years. However, it has gradually decelerated, with the June 2023 level at 5.4 percent. The year-to-date average inflation stands at 7.2 percent.

Governor Remolona also emphasized the potential of increased digitalization in the banking and payment systems to enhance efficiency, competitiveness, and inclusion in the country.

“We are mindful and will manage the associated risks to ensure continued trust and confidence in this increasingly digital economy,” he assured.

“We aspire to include more Filipinos in the financial fold, allowing as many of us as possible to partake in the benefits of economic progress,” he concluded.

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