BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the institutionalization of the Financial Stability Coordination Council (FSCC), through the recent signing of the executive order, is a “much-needed” support for the agencies that fight systemic risks in the country.
In a statement on Thursday, Diokno welcomed President Duterte’s signing of the Executive Order (EO) 144, effectively institutionalizing the FSCC. The FSCC has been operating on a voluntary basis since 2011.
“While the FSCC has been working quietly over the past decade, the EO gives the Council a formal legal standing. This is a much-needed support for the continuing efforts to collectively address systemic risks,” Diokno said.
The FSCC consists of the BSP, the Department of Finance, the Securities and Exchange Commission, the Insurance Commission, and the Philippine Deposit Insurance Corporation.
Diokno said the EO signing is also timely, with the global health crisis likely leaving scars on lives and livelihoods. Because of this disruption, the governor said the key tenet of financial stability is being tested and systemic risk management has gained importance.
“Underlying systemic risks may cover issues that were not in the initial contemplation when the respective charters of FSCC members were formalized. The EO gives us both coverage and depth in managing systemic risks, which is at the heart of financial stability,” Diokno said.
The powers the EO grants to the Council include issuing regulations, collaborating with third parties to collect data, streamlining initiatives on financial stability, as well as the authority to coordinate with financial stability authorities in other jurisdictions.
The EO also strengthens FSCC’s capacity to provide appropriate analysis that is the basis of any intervention.
“Managing systemic risks remains a continuing initiative, to make sure that the financial system is strong enough so that the public benefits from finance,” Diokno said.
He also pointed out that, “Stability is much more than the absence of instability. It is about resilience to unexpected future shocks, and should these shocks materialize, for the system to be best able to recover in the shortest possible time.”