The Bangko Sentral ng Pilipinas (BSP) intends to strengthen its research capabilities in its quest to deepen capital markets to make the financial sector sustainable.
In a conversation with Nomura’s Euben Paracuelles, BSP Governor Eli Remolona Jr. said the move will be undertaken to further the central bank’s financial inclusion efforts.
Remolona said this would also complement the BSP’s efforts to “obsess” over price and financial stability, which can be done by improving the payments system and digitalization efforts.
“Because of my background, I want to strengthen the research capabilities of BSP, and look at our models more carefully. We also want to deepen capital markets to improve the policy transmission mechanism. We will be more serious about sustainability issues and their link to financial inclusion,” Remolona said.
Earlier, Remolona said the BSP is committed to contributing to the country’s efforts to achieve net zero through its 11 sustainability strategies.
One of these is to mandate banks to make climate-related disclosures. He explained that banks would be tasked to report which of their loans and assets is good, bad, or worse for the climate.
The taxonomy to be used for this disclosure system, Remolona said, is being crafted together with climate scientists. Some of the questions that will be asked include whether bank’s loans or assets slow down or accelerate climate change and promote carbon emissions or absorb carbon emissions.
Each metric, Remolona explained, will be weighted allowing the BSP to give each bank an overall rating in terms of its role in climate change.
The 11 sustainability strategies of BSP include vulnerability assessments; enhanced disclosures; climate stress testing; environmental and sustainability risk in prudential policy; and climate change in monetary policy.
The strategies also include incentives for green lending; sustainability in BSP’s portfolio and risk management; task force for inclusive green finance; sustainability in BSP’s operations; and capacity building.
In its maiden Sustainability Report, the BSP outlined its progress in advancing the sustainability agenda in the Philippine financial system toward creating more sustainable, inclusive, and resilient societies and economies.
The BSP said demonetized and mutilated banknotes undergo a shedding process that allow these to be converted into briquettes that can be used as alternative fuel source for biomass gasification facilities.
BSP said its regional office in Greater Manila generated a total of 1.17 million kilo grants of briquetted banknotes that were properly disposed of and re-used as an alternative fuel source.
The central bank also entered into a contract with a service provider that will use the briquetted retired banknotes, banknotes securities waste, and other non-briquetted security waste as alternative fuel for cement manufacturing, instead of using coal and other types of fuel fossils.
Image credits: Patrick Roque via Wikimedia Commons CC BY-SA 4.0