Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said efforts to continue to develop the domestic capital market have not been diminished by the COVID-19 pandemic.
Diokno said capital market reforms being implemented and other measures to further deepen the capital market are structural in nature.
“In fact during the height of the pandemic, in 2020, the bond issuances by domestic banks were oversubscribed,” he said, citing Bank of the Philippine Islands, Land Bank of the Philippines, China Banking Corp. and Union Bank of the Philippines.
The number of participants in investment trust funds also managed to grow by 33 percent in 2020 and 24 percent in the first quarter this year, said Diokno. “These are clear signs of sustained investor confidence in the Philippine capital market,” he added.
Diokno said he is sure that the country’s capital market reform initiatives “will not be overshadowed by COVID 19 pandemic.” The recently passed bill that will institutionalize the Capital Market Development Council adds to his confidence.
The BSP has active role in capital market development initiatives and policies.
“Deep capital markets facilitate the efficient allocation of funds in the economy. By diversifying funding sources, they also support financial system resilience as stresses on a single creditor will not be propagated in the system,” said Diokno. “Aside from addressing funding gaps that cannot be fully met by bank credit, a developed capital market also promotes the availability of a broader range of financial products, and this can support financial inclusion,” he added.
The BSP is working closely with the Securities and Exchange Commission, the Department of Finance, and the Bureau of the Treasury on a roadmap that will support deepening of the capital markets.
“The capital market roadmap is a calibrated, deliberate, and sequenced program consisting of immediate to medium-term action plans. This approach ensures synergy in policy direction at the national level as well as the smooth execution of the necessary reforms by concerned regulatory authorities,” said Diokno.
Since 2020, the central bank has implemented five key capital market-related policies, such as: amendments to the rules on Securities Custodianship and Securities Registry Operations; amendments on the Personal Equity and Retirement Account or PERA rules; and the updated rules on Investment Management Activities or IMA, which reduces the minimum account opening amount for IMA from P1 million to any lower amount, subject to a floor of P100,000; circulars on the exclusion of debt securities held by market makers from the single borrowers limit; and circulars on Expectations on London Inter-Bank Offered Rate or LIBOR Transition.