THE FINANCIAL STABILITY Coordination Council (FSCC) is closely monitoring potential vulnerabilities in the Philippine financial system amid a fragile global economic environment.
The council, during its quarterly meeting held on June 20, reviewed efforts to strengthen the Philippine financial system’s resilience amid shifting global and local conditions, it said in a statement on Monday.
“The FSCC remains committed to inter-agency coordination, data-driven risk monitoring, and deploying needed measures to preserve market confidence and financial system stability,” Bangko Sentral ng Pilipinas (BSP) Governor and FSCC Chairman Eli M. Remolona, Jr. said.
These efforts also include policy initiatives like proposed reforms to the deposit insurance system.
This came even as it noted that Philippine banks have ample capital and liquidity buffers against risks.
“The council assessed potential vulnerabilities linked to changing global financial conditions, geopolitical tensions, and domestic liquidity shifts. These factors could impact asset valuations, debt servicing, market volatility, and trade,” the FSCC said.
“To strengthen its forward-looking surveillance, the council discussed the survey of salient risks, which aims to capture institutional perspectives on key vulnerabilities that may affect the Philippine financial system in the near term. Risks identified include market volatility, policy uncertainty, geopolitical risks, and technological disruptions. The FSCC also reviewed mitigating measures to monitor and address these risks.”
It said they continue to fine-tune their analytical tools to better monitor channels of systemic risks across sectors amid the need for “timely and adaptive policies in a fast-changing financial landscape.”
The FSCC’s 2024 Financial Stability Report released earlier this year said the Philippine financial system remains robust but faces “moderate risks that warrant close monitoring.”
These risks include global uncertainties such as geopolitical tensions, major economies’ monetary policies, and policy shifts in the United States.
US President Donald J. Trump, since returning to the White House in January, has rolled out various measures that he said aim to re-establish the US’ dominance. These include imposing import tariffs on its largest trading partners, which have disrupted global trade flows and roiled financial markets.
Last month, Philippine economic managers narrowed its gross domestic product growth targets amid “heightened global uncertainties” stemming from the US’ trade policies and geopolitical risks.
The FSCC is an interagency body composed of officials of the BSP, Department of Finance, Securities and Exchange Commission (SEC), Insurance Commission and Philippine Deposit Insurance Corp.
The council’s latest quarterly meeting included new SEC Chairman Francisco Ed. Lim, who took office in June. — Aubrey Rose A. Inosante