The Bangko Sentral ng Pilipinas (BSP) is committed to
its price and financial stability mandates, which have provided
an environment conducive for sustained economic growth and
stability over the years.
Philippine economic growth has remained solid for 19 years
to date and has been supported by a favourable inflation
environment, manageable external payments position, adequate
buffers and a sound banking system. This also followed decades
of purposeful structural and regulatory reforms and upgrades in
investment sovereign ratings that allowed greater access to
market financing. With these developments, the BSP has set its
sights on continuously pursuing progressive and dynamic reforms
to achieve greater monetary and financial stability for
In 2016, the BSP formally shifted its monetary operations to
an interest rate corridor system (IRC) to improve the
transmission of monetary policy. To ensure that inflation
continues to be low and manageable, the BSP follows an
established process in its periodic review of monetary policy.
We will continue our monetary policy approach and remain
committed to the inflation targeting framework.
Leveraging on the financial system's current position of
strength, we will continue to pursue proactive micro and macro
prudential reforms to maintain resilience against domestic and
Building on the gains of earlier reforms, the BSP is also
ready to help push the economy toward the next stage of
development through bold reforms for a more efficient,
flexible, market-driven and inclusive financial sector. These
aim to develop deeper money, debt and foreign exchange (FX)
markets that systematically build the country's resilience by
reducing reliance on external funding and insulating the
domestic economy from external shocks.
In this regard, we are committed to more market-based
monetary operations. The success of the IRC as an effective
liquidity management tool has enabled us to initiate a phased
and gradual reduction of the reserve requirement ratio (RRR) to
increase reliance on market-oriented monetary tools and promote
a more efficient financial system by lowering intermediation
costs. By the middle of 2018, we have already rolled back the
RRR by 200 basis points.
At the same time, we are pursuing initiatives to deepen the
local currency debt market, which will aid in funding
infrastructure and investments, thereby sustaining the
economy's growth momentum.
To deepen the FX market, we have liberalised FX
administrative requirements imposed through the banking system
and strengthened oversight over the non-bank parallel market.
We are working with our stakeholders for clearer governance
arrangements that promote fair conduct and
To support our financial inclusion agenda, we are
championing an enabling environment for the digitalisation of
the payments system. Our flagship project, the National Retail
Payments System (NRPS), is expected to boost economic activity
by making an inter-operable, safe and efficient real-time
digital payments system available.
The BSP will remain watchful and vigilant and will continue
to utilize analytical and surveillance tools to timely identify
potential risks to its monetary and financial stability
objectives. More importantly, we have the independence and the
capability to act decisively.