Metro Manila (CNN Philippines) — With Greece’s default, China’s economic restructuring, and the sharp drop in oil prices, 2015 was a tough year for the global economy — and the International Monetary Fund (IMF) predicts more of the same for 2016.
However, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco believes that the country’s banking sector will be starting 2016 “from a position of strength.”
In a speech during the BSP’s Reception for the Banking Community on Tuesday (January 19), Tetangco explained that the country “should be able to manage external risks that may arise from continuing volatility and possible contagion[.]”
“[W]e anticipate that 2016 will continue to test the resilience of our banking system, with market volatility that can heighten market liquidity and credit risks.”
Tetangco said that the central bank will also pursue greater financial integration with countries in the Association of Southeast Asian Nations (ASEAN).
“The BSP will actively pursue bilateral arrangements to designate Qualified ASEAN Banks… under the ASEAN Banking Integration Framework but much work must be done in parallel on payments and settlements, market infrastructure and capital market development.”
Tetangco also mentioned the launch of the central bank’s National Retail Payment System (NRPS) Framework last December. According to the BSP, the framework aims to fast-track the establishment of an effective electronic retail payment system and promote a “cash-lite” economy.
Citing a study from the Better than Cash Alliance, the BSP said that in the Philippines, “99% of payment transactions per month are done in cash, with businesses and individuals making only 1% and 0.3% electronic payments, respectively.”
“The NRPS is envisioned to provide an accessible, inclusive and safe electronic payments system using inter-operable payments network that financially links the country – from Batanes to Sulu — 24/7,” said Tetangco in his speech.
Tetangco expects the banking community “to be even more dynamic” with the entry of six banks coming from Japan, South Korea, Taiwan, and Singapore.
In 2014, President Benigno Aquino III signed Republic Act 10641, which allows the full entry of foreign banks into the country. Such banks have also been allowed to take a 100% stake in local banks.
“The entry of new foreign banks under our liberalized regime should further enhance the quality of competition among our banks and nurture innovations that will ultimately benefit the general public,” said Tetangco.
According to the BSP chief, “The consensus forecast for 2016 is for modest and uneven global economic growth.”
He said that the country is not immune to adverse developments abroad. “Nonetheless, we believe that our sources of resilience will sustain our growth momentum.
“Private consumption continues to be buoyant while the services and industry outputs remain firm. And government spending is expected to further increase in line with continuing efforts to address issues on spending bottlenecks, especially for public infrastructure.”
Tetangco also cited Fitch Ratings’ positive rating outlook on the Philippines for 2016, which he said was the “only one for ASia-Pacific.”
“We will continue to pursue our reform agenda to ensure stability for the long-term. We are unfazed by the challenges that will come our way because we are prepared, because we have been doing our homework.”