Bangko Sentral Aims To Address Unbanked Population And More

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr., stated that the central bank's strategy to support sustained economic growth is focused on three key challenges: managing monetary policy in a supply-shock economy, digitalizing the banking system, and maintaining a safe and efficient payment system that serves the unbanked.

To digitalize the banking system, the BSP has issued policies on digital banking, open finance, regulatory sandbox, and generative artificial intelligence (AI).

During the Philippine Economic Briefing (PEB) in Iloilo City on December 11, he mentioned that inflation plays a central role in the conduct of monetary policy. In a supply-shock economy, monetary policy aims to anchor inflation expectations within the government's target range of 2.0 to 4.0 percent.

Domestic inflation has remained above the BSP's target due to a series of compounding supply shocks caused by pandemic-related containment measures, geopolitical conflicts, and weather disturbances.

"Given that these supply shocks were already impacting inflation expectations, the BSP pivoted and shifted to a more hawkish forward guidance on monetary policy. This timely pivot helped keep expectations fairly anchored around the target," explained the Governor.

He noted that headline inflation slowed down to 4.1 percent last month from a peak of 8.7 percent in January this year, attributed to improving domestic food supply conditions and lower global oil prices.

Headline inflation is primarily driven by supply-side factors, over which the central bank has less control.

To digitalize the banking system, the BSP has issued policies on digital banking, open finance, regulatory sandbox, and generative artificial intelligence (AI).

"We want to ensure that this digitalization will result in better and more products that respond to the needs of clients, help them manage their finances, and enable them to seize economic opportunities," he emphasized.

Furthermore, the BSP has rolled out a Cybersecurity Roadmap and a robust fraud management system to address potential risks from innovation.

On the other hand, the payments and settlements system offers a gateway to financial inclusion to serve the unbanked. "The BSP’s efforts in payments are also looking beyond the Philippines toward regional and global opportunities," explained the Governor.

Aligned with this, the BSP is working with ASEAN neighbors on interoperating retail payments systems through Project Nexxus, for example, Instapay in the Philippines, PromptPay in Thailand, and PayNow in Singapore.

This initiative promises real-time retail payment interoperability in the region.

"The end view is to have scalable, truly global cross-border retail payments. This will not only help in remittances but also open broader economic opportunities for the country," he said.

Governor Remolona participated in the panel discussion moderated by the Department of Budget and Management (DBM) Undersecretary Margaux Marie V. Salcedo on "A Fast-Growing and Forward-Looking Economy" with DBM Secretary Amenah F. Pangandaman, Department of Finance Chief Economic Counselor Zeno Ronald R. Abenoja, and Philippine Chamber of Commerce and Industry – Western Visayas Regional Governor Jobert A. Peñaflorida.

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