The central bank-led Financial Stability Coordination Council (FSCC) has issued another public assurance Wednesday, March 9, that financial regulators are aware and handling emerging systemic risks that could impact on the domestic financial sector amid “changing global market conditions”.
The FSCC is the venue for financial market authorities to identify, monitor, manage, and mitigate the build-up of systemic risk in the local financial system.
During its quarterly meeting, FSCC said it “recognized the fluidity of market conditions and assured the public that it is taking steps to sustain the recovery of the Philippine economy.”
The FSCC said it “also called on the collective effort of its stakeholders as the financial system prepares for global developments which may have systemic risk implications.”
The FSCC is chaired by the Bangko Sentral ng Pilipinas and its members include the Department of Finance, the Insurance Commission, the Securities and Exchange Commission and the Philippine Deposit Insurance Corp.
In February, the FSCC said improving public health infrastructure especially the logistics side, and resolving supply bottlenecks and climate change issues are crucial factors in dealing with emerging systemic risks amid the pandemic.
The FSCC's latest Financial Stability Report (FSR) which covered the second semester of 2021, said the Philippines’ GDP performance will only get stronger this year but to sustain growth, it has identified four issues that the country must address to ensure a full recovery for the long term. This includes growth-at-risk and equity to strengthen recovery, aside from public health infrastructure, among others.
While markets have remained fluid, with COVID-19, the world now has supply chain problem because of the lockdowns. Based on the latest FSR, the current supply bottleneck issue and its impact on prices “will not simply fade any time soon (as this) has implications on global inflation” and thus will affect recovery.
On inequality concerns, the FSR noted that “COVID-19’s underlying scars may not be fully reversed by recovery” because of the socio-economic gap which the pandemic forced to the surface.
To address the inequality issue, it goes back to the public health infrastructure and the restoration of the purchasing power for the “poor” or vulnerable sector. “Without this, vulnerable families will not have the wherewithal to move forward and would instead have to depend on national support. This is not a viable option,” said the FSR.